December 2018 Pending Home Sales

December 2018 Pending Home Sales

  • NAR released a summary of pending home sales data showing that December’s pending home sales pace was down 2.2 percent last month and fell 9.8 percent from a year ago.
  • Pending sales represent homes that have a signed contract to purchase on them but have yet to close. They tend to lead existing-home sales data by 1 to 2 months.
  • All four regions showed declines from a year ago. The South had the biggest drop in sales of 13.5 percent. The West fell 10.8 percent followed by the Midwest with a decline of 7.2 percent. The Northeast had the smallest dip in sales of 2.5 percent.
  • From last month, three of the four regions showed declines in contract signings. The South region had the biggest drop of 5.0 percent. The Northeast fell 2.0 percent followed by the Midwest with a dip of 0.6 percent. The only region with an incline in contract signings was the West, which had a gain of 1.7 percent.
  • The U.S. pending home sales index level for the month was 99.0. November’s data was revised up to 101.2.
  • December’s decline was the pending index’s first drop below the 100 mark after 55 consecutive months over the 100 level.
  • The 100 level is based on a 2001 benchmark and is consistent with a healthy market and existing home sales above the 5 million mark.
December 2018 Existing-Home Sales

December 2018 Existing-Home Sales

  • NAR released a summary of existing-home sales data showing that housing market activity this December, fell after two straight months of gains and was down 6.4 percent from November. Sales of existing-homes dropped 10.3 percent from December 2017. December’s existing-home sales reached a 4.99 million seasonally adjusted annual rate.
  • The national median existing-home price for all housing types was $253,600 in December, up 2.9 percent from a year ago. This marks the 82nd consecutive month of year-over-year gains.
  • Regionally, three of the four regions showed growth in prices from a year ago, with the Midwest remaining flat. The Northeast had largest gain of 8.2 percent followed by the South with a gain of 2.5 percent. The West had a modest gain of 0.2 percent from December 2017.
  • December’s inventory figures are down from last month 10.9 percent to 1.55 million homes for sale. Compared with December of 2017, there was a 6.2 percent increase in inventory levels. It will take 3.7 months to move the current level of inventory at the current sales pace. It takes approximately 46 days for a home to go from listing to a contract in the current housing market, up from 40 days a year ago.
  • From November 2018, the Midwest experienced the largest decline in sales of 11.2 percent. The Northeast had a decline of 6.8 percent followed by the South with a dip of 5.4 percent. The West had the smallest decline of 1.9 percent.
  • All four regions showed declines in sales from a year ago. The West had the biggest drop in sales of 15.0 percent. The Midwest had a decline of 10.5 percent followed by the South with a drop of 8.7 percent. The Northeast had the smallest drop in sales of 6.8 percent. The South led all regions in percentage of national sales, accounting for 41.9 percent of the total, while the Northeast had the smallest share at 13.8 percent.
  • In December, single-family sales were down 5.5 percent and condominiums sales were down 12.9 percent compared to last month. Single-family home sales fell 10.1 percent and condominium sales were down 11.5 compared to a year ago. Single-family homes had an increase in price up 2.9 percent at $255,200 and condominiums rose 2.3 percent at $240,600 from December 2017.
3 Reasons you should buy a house now.

3 Reasons you should buy a house now.

One of the most common questions I get ask is “How is the market?”, and I normally answer “It depends”. Many times this gets people confused and seems like a sales answer, but it really depends.

When someone is telling a story about a restaurant they visited, what is the most common question? “How was the food?”, right? It depends. Some people may love it, while others would never go to the place. The same thing is with the real estate market. It depends on whether you are looking to buy or sell, in what area, the price range, fixer-upper or turn key…All this factors into how to get a straight answer.

Over the last few years, the market was great for most sellers, but for buyers, not so much. There were not enough choices, and even when you found a house, there were sometimes dozens of other buyers making an offer on the same house. Anyone considering buying a house was very frustrated. However, we know that market is cyclical and eventually it will level off. Good news for all the buyers, that level is happening right now.

Here are the 3 reasons you should buy a house now.

  1. Relatively high inventory. Over the last few years, the DFW area has seen tremendous growth. More people moving to the area needing a place caused the shortage of inventory. It took a few years, but this year it has finally caught up, and there are more homes available for sale. Better yet, now you have more choices on new homes as well (little secret: builders are more willing to negotiate).
  2. Low interest rate. In January of this year (2018), the interest rate was 4.03% (FreddieMac). By July the rate went up to 4.53%, only a .5% difference. However, on a $300,000 loan that would translate about $88/mo PI extra (Principal and Interested). Applying that extra to your payment at a lower interest, you would pay off your mortgage about 3.5 years sooner. Most lenders I have spoken to are predicting that the rate will go up another .5-1% in the next year.
  3. Less competition. Most homes are sold in the summer months, that’s when the competition is the strongest. This competition drives the prices up too. However, as the school year starts, many buyers put off moving to the next year. This is the right opportunity for you as a buyer, as you won’t have as much competition from other buyers driving the price up.

Please note that this may not apply to all markets and situations. Its best to talk to your trusted Real Estate agent, Lender, or Financial advisor.

Lastly, if you want to lower your tax burden and increase your net worth, according to many economist and financial advisors, owning real estate is about the best thing you can invest in. Ever wonder why wealthy people own so many homes?

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Raw Count of Home Sales (January 2018)

Raw Count of Home Sales (January 2018)

  • Existing-home sales declined 2.3 percent in January from one month prior while new home sales dropped 7.8 percent. These headline figures are seasonally adjusted figures and are reported in the news.  However, for everyday practitioners, simple raw counts of home sales are often more meaningful than the seasonally adjusted figures.  The raw count determines income and helps better assess how busy the market has been.
  • Specifically, 313,000 existing-homes were sold in January while new home sales totaled 44,000. These raw counts represent a 27 percent decline for existing-home sales from one month prior while new home sales dropped 2 percent.  What was the trend in recent years?  Sales from December to January declined by 30 percent on average in the prior three years for existing-homes and rose by 10 percent for new homes.  So this year, existing-homes outperformed compared to their recent norm while new home sale underperformed.
  • Why are seasonally adjusted figures reported in the news? To assess the overall trending direction of the economy, nearly all economic data – from GDP and employment to consumer price inflation and industrial production – are seasonally adjusted to account for regular events we can anticipate that have an effect on data around the same time each year.  For example, if December raw retail sales rise by, say, 20 percent, we should not celebrate this higher figure if it is generally the case that December retail sales rise by 35 percent because of holiday gift buying activity.  Similarly, we should not say that the labor market is crashing when the raw count on employment declines in September just as the summer vacation season ends.  That is why economic figures are seasonally adjusted with special algorithms to account for the normal seasonal swings in figures and whether there were more business days (Monday to Friday) during the month.  When seasonally adjusted data say an increase, then this is implying a truly strengthening condition.
  • What to expect about home sales in the upcoming months in terms of raw counts? Independent of headline seasonally adjusted figures, expect busier activity in the following two months. For example, in the past 3 years, February sales typically rose by 4 to 5 percent from January while March sales increased by 34 to 44 percent from February. For the new home sales market, the raw sales activity tends to increase in February and March.  For example, in the past 3 years, February sales rose by 13 to 15 percent from January while sales in March increased by 2 to 20 percent from February.

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