March Was A Tough Month For Real Estate
CNN reports existing home sales declined in March over February.
Sales of existing homes fell 8.4 percent to an annual rate of 6.12 million in March from February’s 6.68 million rate, the National Association of Realtors said. It was the biggest one-month drop since January 1989. Economists surveyed by Briefing.com had forecast sales would fall to an annual rate of 6.45 million in March.
On top of slower sales, the median existing home price dropped by .3% to $217,000.
The median home price slipped 0.3 percent to $217,000 from a year earlier, the group said. It was the eighth straight month that measure has fallen and the ninth decline in the last 10 months.
To make things even worse, year over year sales volume dropped by over 11% according to the Washington Post, “it was also 11.3 percent below the number of units sold in March 2006.” This is coming off three straight months of increases.
The blames for the decrease according to NAR economist David Lereah were weather and subprime problems. Like many bubble bloggers, I’m not buying the weather excuse, but I am seeing lending standards tighten up, especially for people with lower credit scores.
Though not related to purchases, I was searching for a 100% cash out refinance the other day for a person with good credit and couldn’t find one.
Being the optimist that I am, I see a lot of potential in FHA loans removing a lot of the pressure from subprime. Last week FHA loan amounts in Utah were raised to better reflect the price of homes in the market. There are some great products in FHA, but borrowers will have to be able to prove their income and there are no investor or 100% LTV variations available. However, for the first time home buyer, or home owner with an adjustable rate mortgage, FHA loans are great products.
I believe as the summer selling season starts making headway, existing home sales will improve. One month’s numbers does not a trend make. Utah’s existing home sales bucked the national trend in the first quarter, but signs of a slow down did appear.
New home sales numbers will be released tomorrow. It will be interesting to see where they end up.