Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for March further confirming, perfectly clearly, the tremendous weakness in the demand of existing residential real estate with both single family homes and condos declining uniformly across the nation’s housing markets.Although this continued falloff in demand is mostly occurring as a result of the momentous and ongoing structural changes taking place in the credit-mortgage markets, consumer sentiment surveys are continuing to indicate that consumers are materially feeling the current recessionary trend which will likely result in even further significant sales declines to come.
Furthermore, we are now seeing solid declines to the median sales price for both single family homes and condos across virtually every region with the most notable occurring in the West showing a decline of 14.9% to the median single family home sales price and a decline of 18.3% to the median condo price.
In a truly ridiculous turn of events, NAR now is arguing that overly “restrictive” lending practices, such as down-payments, are taking their toll on home sales.
NAR senior economist Lawrence Yun sees this “restriction” contributing to the fall off in home sales particularly in the worse off markets.
“Though mortgage rates are at historically low levels, some borrowers are facing restrictive lending practices in declining markets, ... At the same time, many buyers continue to bide their time with a large number of homes to choose from, while other potential buyers remain on the sidelines.”
Meanwhile NAR president Dick Gaylord, suggests that 20% down-payments may simply be unnecessary.
“It appears there is some over-reaction on the part of some lenders now in requiring higher downpayment percentages than may be necessary,”
Too bad for the Realtors though since lending standards will only get more restrictive as lenders further realize losses from subprime, alt-a, prime Jumbo and even prime conforming loans.
The era of FICO driven “slam-dunk” lending is coming to a close and with it will inevitably go all the absurdities leaving borrowers and the real estate industry, if they are lucky, to simply operate in an environment of the traditional “rule of thumb” requirements of substantial down-payments and sensible earnings to debt ratios.
The latest report provides, yet again, truly stark and total confirmation that the nation’s housing markets are declining dramatically with EVERY region showing significant double digit declines to sales of BOTH single family and condos as well as increases to inventory and a continued explosion in monthly supply as a result of the collapsing pace of sales.
Keep in mind that these declines are coming “on the back” of TWO SOLID YEARS of dramatic declines further indicating that the housing markets are truly in the process of a tremendous correction.
The following (click for larger versions) are charts showing sales for single family homes, plotted monthly, for 2006, 2007 and 2008 as well as national existing home inventory and month supply.
Below is a chart consolidating all the year-over-year changes reported by NAR in their most recent report.
