nar: The Real Story Behind Case-Shiller Home Price "Increases" - 08/25/09 03:38 PM
Case-Shiller announced today that home prices rose in June from May by 1.4% for both the 10-city and 20-city indexes.
I'm still trying to figure out why this makes headlines and why people think that this indicates that the housing market is bottoming.
Of course home prices rose from May to June.  They did it in 2007 and 2008 too.  They do it every year.  It is called a seasonal variance. 
According to the NAR the median home value rose from $222,700 to $229,000 in May of 2007 to June of 2007.
And then again in 2008, the median home value rose from … (4 comments)

nar: NAR: Home Values Fell -15.1% Year Over Year In July - 08/22/09 03:58 PM
With all of the talk about a housing bottom, I thought I would point out a small little statistic that the media continues to overlook...home values are still falling.  And they are still falling in all four regions that the NAR tracks. 
Specifically, the median home value fell by -15.0% in the Northeast, -5.9% in the Midwest, -7.1% in the South, and -28% in the West.
According to the most recent NAR existing home sales report, the national median home value fell -15.1% from July of 2008 to July of 2009. 
Here is what the year over year percentage change in … (4 comments)

nar: Observations on NAR's Existing Home Sales Report - 08/22/09 03:39 PM
The NAR published their monthly existing home sales report on Friday which showed that home sales rose 7.2% in July from June on a seasonally adjusted rate and are up 5% from last year at this same time. 
This is clearly good news as the real estate market needs a massive increase in demand in order to absorb the excess supply of homes that is sitting on the market as well as the foreclosures that are about to hit the market. 
The interesting statistic within the report that didn't make the headlines but is just as relevant is that housing inventory, the number of homes … (4 comments)

nar: All Real Estate Is Local, But... - 08/17/09 03:40 PM
The NAR published their quarterly metro home value report this past week.  While there were some bright spots like Elmira, NY, which showed 11.3% year over year appreciation, there is also continued systemic weakness throughout our countries housing markets.
Broadly speaking, the median home value fell -15.6% from the 2Q of 2008 to the 2Q of 2009, this is the steepest decline on record for this quarterly report.
Additionally, all four regions within the United States were down.  The Northeast, Midwest, South, and West experienced home value declines of -9.7%, -8.6%, -10.3%, and -26.6% respectively.  While all real estate is local, every … (4 comments)

nar: Home Value Declines Continue to Drive Sales - 08/16/09 10:06 AM
The NAR published their quarterly home sales report this past week which shows the rate of home sales for all 50 states as well as the District of Columbia.
Of the 51 total markets, 41 of them showed year over year home sales declines from the 2Q of 2008 to the 2Q of 2009.
The year over year data, the weather man's guide, is a better indicator than month over month data as it accounts for seasonal variances as well as providing a larger scope to interpret the information, in other words, a frame of reference.  It is this year over year perspective … (6 comments)

nar: The Weather Man's Guide To Understanding Real Estate Data - 08/15/09 01:10 AM
Due to some recent improvements in seasonal housing data and statistics, a lot of people (Jim Cramer) and media outlets (AP) are beginning to sound the drum for a housing bottom.
I thought it would be worth pointing out that much like the weather, the majority of real estate data is best interpreted in a year over year comparison versus month over month.  The reason for this is because real estate is a seasonal industry, much like the weather is.  Home values, the number of listings, and the number of sales, are driven by the time of the year.
You don't see weather men or women comparing … (4 comments)

nar: Pending Home Sales vs. Existing Home Sales - 08/12/09 01:33 AM
With all of the talk about the recent strength in pending home sales over the past couple of months, there continues to be a headwind-effect between pending contracts and actual existing sales that are reported by the NAR. 
The relationship between the two indicators has revealed that pending home sales appear to be taking a longer time to close, more like 60 days rather than 30 days, and a smaller percentage of the total pending contracts are actually making it to a successful close.
This attrition rate could be attributed to a couple of influences including the new appraisal HVCC guidelines, the complexities of short sales or … (2 comments)

nar: Mortgage Purchase Applications Struggle To Gain Ground - 08/06/09 01:49 AM
The Mortgage Bankers Association announced on Wednesday that the mortgage purchase application index rose just 0.9% from the previous week to 264.4.
This is the fourth consecutive week in which the index has remained below 265, a signal that demand for real estate continues to face a headwind.
The broader measure for the purchase index, the 4-week moving average, is down -2%.
The 30-year fixed rate mortgage fell from 5.36% to 5.17%.
While the NAR's pending home sales index continues to show strength, the MBA's purchase application index is telling a different story.
The reason this index is relevant is because it … (4 comments)

nar: NAR: Housing Affordability Falls To A 6-Month Low - 08/05/09 01:44 AM
According to the NAR, housing affordability fell again in June to a reading of 159.2.  This is the lowest reading since December when we saw 159.1.
The decline in housing affordability is due to a trend of rising mortgage rates, an increase in the median home value which is driven by seasonal variances, and a decline in median family income to the lowest point in over a year.
What may come as a surprise to many though is that despite this fall in housing affordability, pending home sales were the strongest they have been in over a year in June.
The evidence … (4 comments)

nar: NAR: Pending Home Sales Up 6.7% Year Over Year - 08/05/09 01:30 AM
The NAR announced on Tuesday that pending home sales rose for the fifth consecutive month to a reading of 94.6, this represents a 6.7% year over year increase and a 3.6% month over month increase, all good things.
What remains to be seen is just how many of these pending contracts will actually translate into closed sales.  Over the past several months the relationship between pending home sales and existing home sales has remained strained due to appraisal and underwriting constraints.
The other material fact that needs to be considered when talking about pending home sales and demand is how those … (4 comments)

nar: Existing Home Sales Indifferent To Rising Mortgage Rates - 07/30/09 01:49 AM
With so much continuing to be made of a housing recovery being contingent upon historically low mortgage rates and a cheap Fed funny money monetary policy, I thought it would be worth revisiting the ongoing relationship between existing home sales and mortgage rates that continues to defy some of the most seasoned economists' logic, including NAR's own Lawrence Yun.
Here is a comparison between NAR's seasonally adjusted existing home sales and Freddie Mac's 30-year fixed rate mortgage survey over the past several months, this data reveals that record low mortgage rates have had no meaningful impact on demand.  You can call it the law of diminishing … (5 comments)

nar: CNNMoney: "Home prices up for 1st time in 3 years" - 07/28/09 03:49 PM
With all of the headlines being thrown around, often times things are taken out of context, this is one of those times.
CNNMoney.com is reporting today that according to the S&P Case Shiller home price index that home prices are up.  And they were...month over month.
Home prices were also up month over month in June according to the National Association of REALTORS.
Unfortunately, month over month changes in home prices is highly unreliable due to seasonal variances.
In fact, month over month changes are deemed so unreliable that the NAR does not even measure the percentage change on their monthly existing … (5 comments)

nar: NAR: Home Prices Down -15.4% Year Over Year - 07/26/09 03:17 PM
The NAR announced that home values fell -15.4% year over year from June of 2008 to June of 2009.  While bulls would blindly taut that the "pace" of home value declines has slowed from last month's year over year decline of -16.8%, there is still significant systemic risk in the housing market that can't be overlooked, not the least of which is that the pace of foreclosures is actually accelerating.   
To give the current pace of home value declines some perspective, something that is often missing, here is what the year over year percentage change in the median home value has looked like over the past several … (1 comments)

nar: Existing Home Sales Up 3.6% in June, Why That Is Not Enough - 07/26/09 03:10 AM
The NAR announced this week that existing home sales rose 3.6% to a 4.89 million seasonally adjusted rate, the strongest pace since October of 2008.  The rate of sales while encouraging, is still off -0.2% from last year despite an $8,000 first time home buyer tax credit and record housing affordability.
Inventory of existing homes for sale fell -0.7% from last month to 3.823 million and is down -14.9% from the same time last year.
The result is that the month's supply of housing is down -4.1% from last month to a 9.4 month supply and is down -14.5% from June of last year.
Without … (31 comments)

nar: Housing Affordability, Mortgage Rates, And Home Sales - 07/03/09 01:21 AM
The NAR recently published their May Housing Affordability Index which showed that while affordability did drop from a record high 178.8 in April to 171.6 in May, it remains well above historic norms.
Prior to this year, the highest housing affordability index reading was 147.9 in 1973.  The first five months of 2009 the index has averaged 174.72.
To get some perspective on the current index for 2009 and the relationship to existing home sales, here is what the housing affordability index has looked like over the past couple of years according to the NAR:
Affordability Index / Mortgage Rates / Existing … (0 comments)

nar: NAR: Pending Home Sales Hold Steady - 07/02/09 07:41 AM
The NAR announced yesterday that their pending home sales index held steady in May rising 0.1% to 90.7.  It is the highest reading since September of 2008 when the index hit 90.9.  That's the good news.
The bad news is that while there is the possibility that home sales have bottomed, at least for the time being, the current rate of demand is insufficient in absorbing the excess supply of homes.  Until the excess supply of homes is absorbed, home values will erode.  Currently there is a 9.6 month supply of housing, this is well above a balanced market.
When you consider … (5 comments)

nar: Case-Shiller: Home Values Down -18.1% Year Over Year - 07/01/09 05:42 AM
According to the S&P/Case-Shiller home price index, home values declined by -18.1% from April of 2008 to April of 2009.
While real estate bulls will tout that the rate of decline is slowing down, there are two counter arguments that need to be considered.
First, according to the NAR, home values declines are not slowing down, in fact they jumped in May.  Here is what the year over year percentage change in the median home value has looked like over the past several months according to the NAR:
Jun 2008:  -6.1%
Jul 2008:  -7.1%
Aug 2008:  -9.5%
Sep 2008:  -9.0%
Oct 2008:  -11.3%
(2 comments)

nar: NAR: Home Prices Down -16.8% Year Over Year - 06/25/09 01:20 AM
So this is the housing bottom that Jim Cramer is talking about?
You know you have a problem when the NAR numbers for home value declines start to approach the Case-Shiller numbers.
The NAR announced yesterday that the median home price fell -16.8% year over year.  The fastest rate of decline that they have published.  In other words, home value declines are accelerating, not slowing down as you would expect to see if the housing market were actually in a bottoming process.
And yes, while I know all real estate is local, home values were down -12.5% in the Northeast, -10.4% in the … (1 comments)

nar: NAR: Existing Home Sales Post Modest Gain - 06/23/09 11:51 AM
The National Association of REALTORS announced today that the seasonally adjusted rate of existing home sales posted a 2.4% gain from the previous month to a rate of 4.77 million units.  However, sales were still down -3.6% year over year.
While the inventory of homes for sale declined -3.5% from last month and are down -15.3% from last year, there is significant evidence pointing to the fact that we are only in the eye of the storm right now in terms of foreclosures.  With the real unemployment rate surging to 16.4%, with a record 12% of all mortgages at least 30 days late, … (1 comments)

nar: NAR's Lawrence Yun, The 30-Year Fixed, and Home Sales - 06/11/09 07:27 AM
The Mortgage Bankers Association announced on Wednesday that the 30-year fixed rate mortgage surged to 5.57% from the previous week at 5.25%.  This is the highest rate for the weekly survey since the week of November 26th of 2008 when the 30-year was at 5.99%.
What is interesting is that despite the 30-year fixed rising nearly a full percentage point over the past month, the demand for mortgage purchase applications has not been impacted.  And the reason purchase applications have not been impacted is because there was never a bounce when rates plunged to historic lows, housing affordability was already the highest on record.  … (11 comments)

 
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Mark MacKenzie

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