–NAR Econ Says Inventories to Improve Further in Future Months

By Denny Gulino and Ian McKendry

WASHINGTON (MNI) – U.S. sales of existing single-family homes, town
homes, condominiums and cooperatives rose above expectations, by
7.7%, to the best rate since March, 5.03 million, despite Hurricane
Irene’s disruptions, the National Association of Realtors reported
Wednesday.

Expectations for August sales had centered on 4.79 million. July
sales, at a 4.67 million rate, was unrevised.

As notably improved as were sales, the total units on the market
for sale, just 8.5 months worth at the August sales pace, was equally
more impressive, given an entire month’s improvement from July’s 9.5.
Jed Smith, the NAR’s managing director of quantitative research, told
reporters that the supply on the market could be expected to diminish
into the winter months, improving even further the months’ supply
figure.

If it improved to between seven and eight months, Smith said, that
would be “consistent with price stabilization” and if it ever gets down
to six months, that would finally return the existing homes market to
“healthy price appreciation.”

For now, prices in August are still down with the August national
median price of $168,300 5.1% below a year earlier.

Regionally, prices were down the most in the West, by more than
13%, but sales were up in all four regions more than 10% in a year.

Single family home sales rose 8.5% in August to an adjusted annual
rate of 4.47 million, 20.2% above a year earlier.

Condo sales measured alone rose just 1.8% to a 560,000 annual rate,
8.3% higher than a year earlier.

In a written statement from NAR Chief Economist Lawrence Yun, who
was not present for the release of the data this month, he suggested
August sales figures may have been enhanced by transactions delayed from
previous months. “But favorable affordability conditions and rising
rents are underlying motivations.”

“Investors were more active in absorbing foreclosed properties,” he
continued. “In addition to bargain hunting, some investors are in the
market to hedge against higher inflation.

While sales were above expectations in August, many of the minor
metrics remained in the range of continuing stress, with sales of
distressed properties, those likely to be a drag on prices, up to 31% of
the total, from 29% in July. Foreclosed properties made up 19% of sales.
Short sales comprised 12%. All-cash sales, at 29% of the total,
“suggests tight underwriting standards,” Smith said, was well as the
presence of investors in the market who don’t borrow money to snatch up
good deals.

First-time buyers, at 32%, remained below the more normal 40%
share. The proportion of investors in the market, a sign that
normalization of buyers is still in the distance, was 22%, up from 18%
in July.

Smith said rents continue to increase, and as reflected in the
Consumer Price Index for August by a bit more than usual. Only 18% of
Realtors now report falling rents in their regions, he said.

Smith also said the NAR is deep in its rebenchmarking process,
taking data from courthouse records to compare with its monthly surveys
of Realtors. He said he was not able to comment on whether the
preliminary numbers show the NAR’s monthly figures have been on the high
side and said the figures would be released first to housing economists
for comment and won’t be finalized until “a frank and complete dialogue
with all the stakeholders.”

** Market News International Washington Bureau: 202-371-2121 **

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