June home sales up 8.2% year over year, but annual pace cools

From Bloomberg:

Sales of Existing U.S. Homes Unexpectedly Decrease: Economy

Previously owned home sales fell unexpectedly in June as tight supply and increasing rates for mortgages imperiled the real-estate market recovery in the U.S.

Purchases (ETSLTOTL) fell 1.2 percent to a 5.08 million annualized rate, the National Association of Realtors reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg called for a 5.26 million pace. Demand was the second-strongest since November 2009 following May’s downwardly revised 5.14 million rate.

First-time buyers are having difficulty finding properties for less than $100,000 as a lack of inventory pushes up property values, and higher mortgage rates are also starting to cool demand for more expensive houses in the West and Northeast, the real-estate agents group said. Federal Reserve Chairman Ben S. Bernanke last week said housing was one of the bright spots for growth and added policy makers will monitor the recent jump in borrowing costs to ensure it won’t derail the nascent recovery.

“Demand is still fairly strong, but this is where the inventory constraints come into play,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, who predicted sales would decline to a 4.99 million pace. “Inventories still remain fairly tight, particularly on the low end of the price scale.”

Estimates in the Bloomberg survey of economists ranged from 4.99 million to 5.5 million. The prior month’s pace was revised from a previously reported 5.18 million.

Sales climbed 8.2 percent from June 2012 before adjusting for seasonal variations, today’s report showed.

The median price of an existing home climbed 13.5 percent to $214,200 last month from $188,800 a year earlier.

The number of properties on the market increased 1.9 percent to 2.19 million, the fewest for any June since 2001. These data aren’t adjusted for seasonal changes, so it’s important to compare figures for the same month each year.

“There’s going to be a few bumps in the road, but overall we expect the housing market to look pretty decent,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, who projected sales would slow to a 5.05 million pace.

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52 Responses to June home sales up 8.2% year over year, but annual pace cools

  1. grim says:

    From Forbes:

    Existing Home Sales Decline In June: Here Is What’s Behind That Drop

    On Monday, the National Association of Realtors released its existing home sales report. While the sales pace of previously owned homes remains 15% higher than it was a year ago, the June numbers reflect a monthly 1.2% decline.

    “Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand,” said Lawrence Yun, chief economist of NAR, in a statement. “However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market.”

    Several factors contribute to the monthly drop in home sales and while there’s no reason to fret about that decrease just yet, economists are keeping their eyes on those factors to determine just how much they will shape the housing recovery in the second half of 2013. Among them: rising mortgage rates, still-tight inventory levels and decreases in distressed activity.

  2. Painhrtz - Disobey! says:

    Looks like the NAR is going to need to trot whoever their newest Baghdad Bob is. F*cking joke all it is are people fighting over what little inventory their is. My neighbor behind me just sold his house at list over 400K and it has not been updated since it was built in 1986. Sunken living room, oil tank, septic and all. Granted it is on 5+ acres but I would not pay it. Especially with the 13K taxes.

  3. chicagofinance says:

    Also fear of interest rates rising…….people don’t understand what they don’t understand…..

    Painhrtz – Disobey! says:
    July 23, 2013 at 8:49 am
    Looks like the NAR is going to need to trot whoever their newest Baghdad Bob is. F*cking joke all it is are people fighting over what little inventory their is. My neighbor behind me just sold his house at list over 400K and it has not been updated since it was built in 1986. Sunken living room, oil tank, septic and all. Granted it is on 5+ acres but I would not pay it. Especially with the 13K taxes.

  4. JJ says:

    For home prices, it’s back to 2005, according to FHFA data
    U.S. home prices in May as measured by the Federal Housing Finance Agency rose 0.7% on a seasonally adjusted basis, or up 7.3% on a year-on-year basis, according to data released Tuesday.

    That puts the index 11.2% below its April 2007 peak, or put another way, back to January 2005 levels.

    Every region showed growth on a year-over-year basis, ranging from 3.3% in the Middle Atlantic to 15.8% in the Pacific. On a monthly basis, the East South Region saw a 1.5% decline while the South Atlantic region saw a 1.8% gain.

    The FHFA data is slightly different from other home-price indexes in that it measures mortgages bought or guaranteed by Fannie Mae and Freddie Mac. That makes it a slightly better tool to measure the price gains for middle-class buyers, since jumbo loans above $625,500 aren’t included in the series.

  5. Dissident HEHEHE says:

    They need more downpayment money from the Bank Of Mommy & Daddy N.A. Damn baby boomers aren’t living up to their obligations.

  6. JJ says:

    How much is 5 acres worth? Maybe it was mainly for the land. Also 1986 for NJ/NY is considered a new house.

    Most pieces of crap are stuff thrown up after war in a few hours with a couple of guys drinking beer. Levitt used to do one house a day. Sunrise to Sunset. That crap went up on time.

    Painhrtz – Disobey! says:
    July 23, 2013 at 8:49 am

    Looks like the NAR is going to need to trot whoever their newest Baghdad Bob is. F*cking joke all it is are people fighting over what little inventory their is. My neighbor behind me just sold his house at list over 400K and it has not been updated since it was built in 1986. Sunken living room, oil tank, septic and all. Granted it is on 5+ acres but I would not pay it. Especially with the 13K taxes.

  7. Painhrtz - Disobey! says:

    JJ most of it is unbuildable wetlands and it borders school property. zoning in my town has pretty much rendered it a wildlife preserve. Plus it is a flag lot. dude is in his seventies good for him but unless the new debtors plan on doing some major upgrades the house is significantly lacking at that price.

  8. Painhrtz - Disobey! says:

    JJ most of it is unbuildable wetlands and it borders school property. zoning in my town has pretty much rendered it a wildlife preserve. Plus it is a flag lot. dude is in his seventies good for him but unless the new debtors plan on doing some major upgrades the house is significantly lacking at that price. Plus I live in Western NJ alot of stuff here was farms until the eighties housing boom

  9. Ragnar says:

    Prices going up from lack of supply is a valid reason for prices to go up.

  10. Painhrtz - Disobey! says:

    well that was weird

  11. JJ says:

    Maybe the Gilgo Beach Killer can buy it. He needs his own wetlands to bury bodies as they keep finding the ones he leaves on Long Island.

    Painhrtz – Disobey! says:
    July 23, 2013 at 9:54 am

    JJ most of it is unbuildable wetlands and it borders school property. zoning in my town has pretty much rendered it a wildlife preserve. Plus it is a flag lot. dude is in his seventies good for him but unless the new debtors plan on doing some major upgrades the house is significantly lacking at that price.

  12. Painhrtz - Disobey! says:

    Rag not disputing that, the lack of inventory is fueling a bit of the same mania from 2005.

  13. Ragnar says:

    There’s still an abandoned house a few houses down the street from me on a cul de sac. Could easily sell for $750k I think. Spacious house in a good neighborhood where similar houses have been selling for over $800k. Some lender weatherproofed it and cuts the grass once per month, but after the previous “homeowners” couldn’t get their $1mn cost basis selling it 3 yrs ago, they ran off to another country, and it seems that nobody can get something done with it.
    I wonder how much similar inventory is sitting on the sidelines.

  14. The Original NJ ExPat says:

    [13] The difference from 2005 is now you’re moving into a neighborhood of underwater or defaulted buyers. They probably all have nice cars though.

  15. JJ says:

    I always find it amazing how many people think buyers care if they are underwater or not. I also get buyers the other day who think cause you paid little they should get a deal. I have a house near me for sale by original owner for 440k that he paid 14K for like 55 years ago. It is not an estate sale. Houses like that sold for 560K at peak. It is worth realistically 414K. So why should buyer care if he bought it for 156K less than prior guy or 400K more than prior guy. It is worth what it is worth.

    But somehow buyers feel better if they bought it for 200K less than peak prices than the owner is making a 200K profit even if the prices are the same and houses identical.

    The Original NJ ExPat says:
    July 23, 2013 at 11:31 am

    [13] The difference from 2005 is now you’re moving into a neighborhood of underwater or defaulted buyers. They probably all have nice cars though.

  16. dig dug says:

    Res Ipsa Loquitor

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/Affordability.jpg

    The curve is for the purchase price V interest rates for $2k monthly P&I (presumes 20% down).

    No job growth.
    No salary growth.
    House prices rabid. (I’ve seen sq ft pricing increase by 50% in 5 yrs – keep it, it’s not a global port!)
    NJ. NJ. NJ. NJ. (you get the point – 70k/yr leaving! Tax payer egress in process.)
    Mark-to-Market replaced by Mark-to-Myth (else the banks would be insolvent trying to cover their 10-to-1 leverage on losses from mark-to-market acounting in existince prior to Mar/Apr 2009)
    No cause for banks to clear the shadow inventory (so much for free markets)
    No cause for municipalities/counties to foreclose on defaulter (thanks for nothing)
    Costs nothing for banks to borrow from Fed. (ok, actually .2%/yr via an overnight lending rate)
    Hi net worth investors buying all land to squeeze rental rates & inflate the asset price bubble (residential & commercial).
    Govt subsidizing the price increases (and the cash flow squeeze on citizens).
    Companies retaining all profits, not reinvesting, hiring or increasing salaries to reflect per capita profitability contributions.
    It makes total sense. (Sarcasm off – WAKE UP!)

    ‘Going to the gulch. Keep your dirt and hut, corrupt politicians and the rest – until this farce implodes, and you did nothing to stop it.

    Oh, and I wasn’t the 1st on this thread. (An every day exhibition of idiocy.)

    Dig Dug

  17. JJ says:

    One big trouble with chart is you are doing apples to apples. If your budget is 2k month and rates or home prices rise and you need a house you still buy a house, you just get a crappier house.

    I mean lets say I owned a time travel machine. I had 2k a month to rent in Manhattan in 1993 vs 2013. I work in Manhattan and want to live in Manhattan. Today I would find some dumpy cold water flat in Chinatown for 2k and in 1993 I be living in a deluxe apt in the sky like George Jefferson.

    That was biggest issue in 2003-2007 folks still bought but got stuck in tiny starter homes and crappy condo/coops.

    ig dug says:
    July 23, 2013 at 12:27 pm

    Res Ipsa Loquitor

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/Affordability.jpg

  18. Juice Box says:

    re: # 18 – 2003-2007 yup stuck in a starter home or crappy condo at 2k a month not including taxes! Fog a mirror bitches!

  19. toomuchchange says:

    Living at home at adults has been talked about here before. It certainly can be a good money-saving strategy. Note that in the WSJ article, everybody they quoted were employed college graduate kids in their 20s who lived with willing parents. I would think that some others living with strangers would not be so positive about their experiences.

    http://online.wsj.com/article/SB10001424127887324263404578613641302074464.html

    More Americans Living in Others’ Homes

    “The number of so-called missing households—representing adults who would be owning or renting their own home if household formation had stayed at normal rates since the recession—has increased 4% over the past year, according to an analysis for The Wall Street Journal.

    There are now some 2.4 million such people, many of them living with their parents, but also seniors living with their adult offspring and people renting rooms in a home headed by an unrelated person.

    ….

    The analysis on missing households, performed using census data by Jed Kolko, chief economist of real-estate website Trulia Inc., suggests that four years into the U.S. recovery, slow household formation remains an obstacle to a more robust economy. It is damping demand in the housing market, where home sales have been rising but remain below historical levels.

    Young adults “have not regained confidence in the economy enough to start moving out of their parents’ homes,” Mr. Kolko said. “Even people with jobs are choosing the security…of living under their parents’ roof rather than forming their own households.”

    ….

    “More than half of the missing households represent Americans ages 18 to 34 years, Mr. Kolko estimated. The rest are split roughly evenly between those ages 35 to 54, and those 55 and above.”

  20. JJ says:

    How about those folks with ARMs who got remapped into a flood zone. And had homeowners and RE taxes jacked. Sandpaper condoms worn by Wilt Chamberlain would hurt less

    Juice Box says:
    July 23, 2013 at 1:49 pm

    re: # 18 – 2003-2007 yup stuck in a starter home or crappy condo at 2k a month not including taxes! Fog a mirror bitches!

  21. JJ says:

    Living at home makes sense. Think about it if your parents live within 30 miles of Manhattan anything you rent will be an awful hell hole compared to your parents house which is free.

    I see tons of out of state new hires at Goldman, Merrill, Chase, Big 4 etc. paying skyhigh rent as they have to.

    But Johnny from Bayside Queens, Vito from Brooklyn, Suzie from Garden City or Linda from North Bergen they just live at home for free. Bang out some student loans and party with left over. They know the dump they rent with student loans and maybe fact they are stuck with a car lease would end up with them eating 99 cent noodles on coach with three roomates and no AC.

    My favorite, is Family vacations with kids up to 35. Still mooching off Mom and Dad for trips to Islands or Shore. Why pay for your own trips at 29. Heck if you live walking distance from train why even have a car. Dad doesnt go out after 8pm anyhow. Heck use Dads season tickets, his time share, his cell phone plan and have Mom be your own valet, cook and tailor all for free.

  22. Feh. Best use for parents is as human shields when the shooting starts.

  23. JJ says:

    I would like to be an only child with a widowed Dad whose super hot fiancee trophy wife to be lives with us in our mansion. A few days before wedding Dad has a heart attack and I let out of the kindness of my hot the insanely hot 32 year old live with me and I take in her equally but younger sisters and her super hot daughter who just turned 18 she had out of wedlock when she was 14.

    The story ends happily as I convert to Mormonism and make everyone sign a pre-nup.

    Scrapple n’Ricin says:
    July 23, 2013 at 2:35 pm

    Feh. Best use for parents is as human shields when the shooting starts.

  24. xolepa says:

    (22) Sounds like my middle one, except on a much reduced scale. He is waiting for med school app decisions.

  25. JJ says:

    The S&P 500 stock index hit its last peak in October 2007. (It finally surpassed that level this past March.) Someone who had bought $100 of shares at that market top and reinvested all dividends would currently have about $123. By contrast, the Case-Shiller index of U.S. home prices is still more than 25 percent below the peak reached in mid-2006.

  26. Carlos Danger says:

    If you recieved any text messages from me please delete them.

  27. JJ says:

    Are you anthony weiner or geraldo?

    Carlos Danger says:
    July 23, 2013 at 4:32 pm

    If you recieved any text messages from me please delete them.

  28. Carlos Danger says:

    re: @ 28 – Question is what will the NYPost headline be tomorrow and will they post a PP pic?

  29. JJ says:

    Its great to be a weiner!

  30. chicagofinance says:

    El Tiante….

    JJ says:
    July 23, 2013 at 4:57 pm
    Its great to be a weiner!

  31. chicagofinance says:
  32. grim says:

    Weiner – Dude – Snapchat – Didn’t you learn anything? C’mon even the kids have this one figured out.

  33. Anon E. Moose says:

    Dig Dug [17];

    Zero Hedge is the king of the non-zero baseline chart. Nothing like setting $0 == $300k to hype the “Plunging”. I’m not saying its not real, just that its overblown.

    Also notice that the graph flattens as the rate goes out — we’ve enjoyed an extraordinarily low interest rate period (I’d think that 6% is closer to normal absent gov’t intervention) and the first part of the reversion is the steepest.

  34. chicagofinance says:

    Another classic NY Post Headline

    WEINER WON’T PULL OUT

  35. chicagofinance says:

    The End Is Nigh (JJ Fast Food Edition):
    http://www.cnbc.com/id/100907133

  36. grim says:

    Anyone who managed to execute a new purchase with a 30 year loan at 3.4% was lucky, that was not something that could have been anticipated, planned, or acted on in real-time. It was pure luck, the rate was a gift, stars aligned and stayed there.

    Anyone who says that folks were buying because of a 3.4% rate, or even a 3.5% rate, has never been through the process themselves. In normal times it’s easy for rates to fluctuate as much as a quarter point up and down, just based on secondary market activity, let alone jawboning and the Fed, economic reports, or some shit going on in China.

    Being able to be in a position to lock a rate isn’t something that you can control with the absolute certainty necessary to cherry pick a rate.

    If, one day you saw rates drop to 3.4% again, and said to yourself, this is great, I’ll buy a house, what do you do? You start looking for a house. How long does that take? A week? Two weeks? Two months? You aren’t even remotely in a position to lock until you’ve got an inked deal together, and in some cases you need to have your appraisals done and mortgage apps over to underwriting.

    Seeing a low rate might have spurred activity in hopes that someone nailed that rate, but buying because of it? Near impossible. There are a number of folks here that were lucky enough to nail 3.5% 30 years on their recent purchases, they can chime in here, and they’ll tell you how agonizing the process is trying to ensure you can lock at that low rate, and close before the lock expires. And, the only reason they were able to capitalize, is they were already entering into contract when the rate window opened.

    The fact of the matter is very few transactions executed at 3.4% in the past year, compared to the last full year’s worth of transactions, basing any argument on a comparison against a 3.4% rate is really just being disingenuous.

  37. grim says:

    Just for reference, the best window to have locked a 3.4% in the past year was between mid November 2012 and early January 2013. Essentially, Thanksgiving, Hanukkah, Christmas, Kwanza, and New Years.

    Traditionally, this is heading into what is seasonally the lowest inventory time on the market. Compounded with the fact that showings are very difficult to plan during the holidays, since many folks have weekends blocked for parties, etc. Not only sellers, but buyers face the same scheduling constraints. And nobody wants to do lockbox showings with a house full of presents either.

    What’s this mean? Nailing the 3.4% was like stepping in shit, and then stepping in a pile of hundred dollar bills that stuck to the shit. 3.4% was in no way representative of anything.

  38. Juice Box says:

    re: “already entering into contract when the rate window opened.” I figured when we started looking in January when rates were around 3.4% it would take a while to find a place so we looked and looked and then put in offer in end of March, rates went up a bit but not much, and then back down again and I busted balls to make sure we got the 3.5%. Then again excellent credit and finances play a signifigant role, they wanted paperwork galore.

    http://www.bankrate.com/funnel/graph/default.aspx?cat=2&ids=1,-1&state=zz&d=365&t=MSLine&eco=-1

    Pre-approvals don’t mean squat, until you get further down the pipe after they stick a endoscope up your finances and even then for some like my old neighbor who was buying the same time I was you don’t always make it to the close. They didn’t, two days before close apparently something came up and the could not get the final approvals for their mortgage. They are still renting….

  39. grim says:

    The other issue is during that time, lenders were very slow to drop rates, and very quick to raise them at the first sign of any pressure on the 10 year or positive news. I’d hear folks bitching all the time about their lender having a higher rate than what they heard on the street, or got “quoted” on the phone with another lender or broker. I know a couple of folks that swapped lenders mid-stream hoping to game a tenth, and ended up with nothing to show for the additional legwork (sorry, we quoted you the market rates on that day, and today is a different day).

  40. Dan in debt says:

    I got 2.625 on a 7 year arm good till Feb 2020. I only need one more good run down in a couple of years to think about making it fixed. In the meantime loving the low payments and paying down.

  41. Anon E. Moose says:

    I locked ~45 days before closing at 3-5/8%, no points. The rate had just floated down 1/8 after being quoted at 3-3/4% when I applied. The prevailing rate was another 1/8 lower a month later. I asked for a rate float, but since I was locked, the best they would offer me was to buy down 1/4% for 0.5 pts. That was less that 3-year break even, so I took it.

    I never considered an ARM, because my plan was at least 10 years in this house, plus I didn’t think rates would ever be so low again in my lifetime. Comparing a 30 FRM at 3-5/8% to a 7/1 ARM at 2-5/8%, the P+I payment would be almost 10% lower (until any rate change). Had I made the same payment on the ARM as the FRM, I’d have 5% more equity in that 7 years. But 2% inflation alone adds 15% to my nominal equity in 7 years time, eclipsing the benefit of the rate difference. Based on the payment shock risk, that sort of benefit just wasn’t worth it to me — but I am fairly risk-averse.

    That was another thing I found in all of my twists and turns and research and calculations and spreadsheets — over anything more than 5 years, the effect of appreciation (good or bad) far eclipsed anything that I had any control over.

  42. juice (39)-

    Endoscope? More like a plunger handle.

  43. Brian says:

    Same logic applies to gasoline prices.

    grim says:
    July 23, 2013 at 7:24 pm
    The other issue is during that time, lenders were very slow to drop rates, and very quick to raise them at the first sign of any pressure on the 10 year or positive news. I’d hear folks bitching all the time about their lender having a higher rate than what they heard on the street, or got “quoted” on the phone with another lender or broker. I know a couple of folks that swapped lenders mid-stream hoping to game a tenth, and ended up with nothing to show for the additional legwork (sorry, we quoted you the market rates on that day, and today is a different day).

  44. Libtard at home says:

    I locked my 15 year NO COST at 2.75! Bet there’s not a person here who did better than that. I locked at the historic record low to the day. The Monday after, Bernanke opened his trap. For refinancing, you don’t have to find a home to purchase. After years and years of watching the gubmint reward bad behavior both on Wall Street and on MLK Ave., it’s nice to finally get something for playing by the rules. Now just don’t look at my 1040.

  45. Grim says:

    Refi is a whole different matter, and I agree easier to jump on a rate.

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  47. Imagine where rates will plunge when the inevitable crack-up boom hits.

    Deflation, bitchez!

  48. We will be in a ZIRP environment until the entire necronomy goes up in smoke.

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