Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for April again 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 while inventory swelled dramatically yielding a stunning 11.2 months of supply for all residential properties, 10.7 months for single family properties and a truly whopping 14.2 months for condos.Although this continued falloff in demand is mostly 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 continuing to see 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 17.2% to the median single family home sales price and a decline of 15.1% to the median condo price.
As usual, the NAR leadership is spinning the miserable results while simultaneously turning to Washington D.C. for handouts by pumping such ludicrous federal programs as government backed zero down, “conforming jumbo" loans and the elimination of GSE “declining markets” policy.
NAR senior economist Lawrence Yun suggests that buyers that have been discouraged by recent restrictive lending standards take another look at the current options.
“I would encourage buyers who were disappointed by poor mortgage options to take another look at the market because the lending changes are significant, … Also, a recent notable drop in interest rates on conforming jumbo loans will help consumers in high-cost markets like California and New York.”
Meanwhile NAR president Dick Gaylord continues his assault on down-payments:
“In the past week, Freddie Mac and Fannie Mae announced that they were eliminating their ‘declining market’ policies, effective June 1, … This means consumers across the country will have access to safe, affordable financing with downpayments of only 5 percent on most mortgages, with 100 percent financing available on some loan products, and we could see an upturn in home sales this summer.”
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.
