Consumers across the country can now take advantage of a Federal Housing Administration program to allow qualified home buyers to apply the $8,000 tax credit when purchasing a home. FHA will now permit its lenders to provide a short-term bridge loan that will let qualified home buyers use the tax credit to either make a larger downpayment above the FHA required 3.5 percent, cover closing costs, or buy down their interest rate.

“A true housing recovery depends on buyers returning to the market and reducing inventory,” said National Association of Realtors^® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Since many of the homes available are lower priced starter homes, the ability for individuals to use the tax credit at closing should have a meaningful impact on home sales and values and will allow thousands of families to achieve the dream of homeownership.”

Shaun Donovan, secretary of the Department of Housing and Urban Development, announced the change today. In an address to several thousand Realtors^® gathered two weeks ago at NAR’s Real Estate Summit: Advancing the U.S. Economy, Donovan announced HUD’s plan to offer the tax credit as downpayment assistance. Donovan detailed the modifications to that original proposal and announcement.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans,” Donovan said. According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans allowing eligible home buyers to access the funds immediately at the closing table.

NAR has supported monetization of the tax credit, which was part of an Obama administration housing stimulus plan enacted earlier in the year. NAR petitioned HUD to allow home buyers to use the $8,000 tax credit to help them cover downpayment or closing costs to bring new home buyers to the market and stimulate home sales.

“We think this is a good program; our members have been getting many inquiries from potential buyers about it,” McMillan said. “NAR is pleased that this enhancement has been made to the administration’s housing recovery program. As we have heard before, there can be no economic recovery without a housing recovery. With an abundance of inventory, reduced home prices, historically low interest rates and now the availability of the tax credit at closing, we expect to see the housing market further stabilize and improve.”

Existing-home sales rose in April with strong buyer activity in lower price ranges, according to the National Association of Realtors^®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 2.9 percent to a seasonally adjusted annual rate¹ of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March, but were 3.5 percent below the 4.85 million-unit level in April 2008.

Lawrence Yun, NAR chief economist, said first-time buyers continue to influence the market but there also is a seasonal rise of repeat buyers. “Most of the sales are taking place in lower price ranges and activity is beginning to pick up in the midprice ranges, but high-end home sales remain sluggish,” he said. “The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program.”

“Because foreclosed properties will likely be released into the market over the rest of year, it is critical that distressed homes be quickly cleared from the market,” Yun said. “Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings, particularly in California, Nevada, and Florida – this will set the stage for healthy market conditions going forward.”

An NAR practitioner survey in April showed first-time buyers declined to 40 percent of transactions, implying more repeat buyers are entering the traditional spring home-buying season. It also showed the number of buyers looking at homes has increased 14 percentage points from a year ago. “This is consistent with our forecast for home sales in the latter part of the year to be 10 to 20 percent higher than the second half of 2008,” Yun said.

The national median existing-home price² for all housing types was $170,200 in April, which is 15.4 percent below 2008. Distressed properties, which accounted for 45 percent of all sales in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said conditions are optimal for buyers with good jobs and long-term plans. “We have record low mortgage interest rates, a wide selection of homes and affordable prices in most areas,” he said. “When you add the $8,000 first-time buyer tax credit, it’s hard to imagine a better time to make an investment in your future through homeownership.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.81 percent in April from 5.00 percent in March; the rate was 5.92 percent in April 2008; data collection began in 1971.

Total housing inventory at the end of April rose 8.8 percent to 3.97 million existing homes available for sale, which represents a 10.2.-month supply³ at the current sales pace, compared with a 9.6-month supply in March. “The gain in inventory is largely seasonal from sellers entering the spring market. Even with the rise, inventory over the past few months has remained consistently lower in comparison with a year earlier,” Yun noted.

Single-family home sales rose 2.5 percent to a seasonally adjusted annual rate of 4.18 million in April from a level of 4.08 million in March, but are 2.8 percent below the 4.30 million-unit pace in March 2008. The median existing single-family home price was $169,800 in April, which is 14.9 percent below a year ago.

Existing condominium and co-op sales increased 6.4 percent to a seasonally adjusted annual rate of 500,000 units in April from 470,000 in March, but are 9.4 percent lower than the 552,000-unit pace a year ago. The median existing condo price⁴ was $173,900 in April, down 18.5 percent from April 2008.

Regionally, existing-home sales in the Northeast jumped 11.6 percent to an annual pace of 770,000 in April, but are 10.5 percent below April 2008. The median price in the Northeast was $237,400, which is 9.6 percent lower than a year ago.

Existing-home sales in the Midwest slipped 2.0 percent in April to a level of 1.00 million and are 9.9 percent lower than a year ago. The median price in the Midwest was $138,800, down 11.7 percent from April 2008.

In the South, existing-home sales increased 1.8 percent to an annual pace of 1.74 million in April but are 8.9 percent lower than April 2008. The median price in the South was $148,000, which is 12.8 percent below a year ago.

Existing-home sales in the West rose 3.5 percent to an annual rate of 1.17 million in April and are 19.4 percent higher than a year ago. The median price in the West was $222,600, down 21.8 percent from April 2008.

Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors^®.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.

Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”

The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.

“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor^®, who can advise consumers on the housing assistance programs and resources available in a given area.”

NAR’s Housing Affordability Index² is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.

A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.

Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”

The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.

For the past 18 months there was no sense of urgency. That seems to have changed. We are not even close to a sellers market, but we are working that way. Once the lower end items are snapped up the masses will realize that the market is heating up again and will want to get a “deal” while they can. I will be the first to say they better hurry up in some markets. It is funny how most will not get into the market until everyone is in and the best deals are gone.

Home prices continue to fall which makes it even more exciting for a good rebound into next year. If only the interest rates would get below 5% again we would be golden! Why are you still reading this? Go buy some property!

> Nationally, January foreclosure filings decreased10 percent compared to the previous month. > In January, the number of foreclosuresoccurring in N.C. decreased 29.3 percent when compared to January 2008. Nationally,foreclosure rates were 18 percent higher in January 2009. > North Carolina continues to descend in the official ranking of foreclosure rates, and is 33rd nationally. > Four states – Nevada, Arizona, California and Florida – represented 53 percent of the 274,399 foreclosures in the U.S. in January.

ECONOMY

> North Carolina is consistently at the forefront of affordable housing. Most recently, Cornelius was named one of the most affordable suburbs in the country. Fayetteville and Rocky Mount were both recognized for high price appreciations. 

> In 2008, North Carolina welcomed the most newcomers (versus loss of residents) of any state, according to moving services website Relocation.com. For every 100 people leaving, 180 moved in.

HOMEOWNERSHIP

> In February, Gov. Bev Perdue signed an authorization that could save N.C. homebuyers more than $30 million. > The National Association of REALTORS® estimates the impact of the stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package.

> Homes were more affordable in December 2008 than at any other point since the National Association of REALTORS® began its housing affordability index in 1970.

The following is a statement by National Association of Realtors^® President Charles McMillan:

“The American Recovery and Reinvestment Act is important for the U.S. economy and contains some important housing provisions. Eliminating the repayment provision in the $7,500 first-time home buyer tax credit will help bring buyers to the market and reduce housing inventory. NAR has been advocating that this provision be improved – the change will stimulate more than 200,000 additional home sales, which will help stabilize home values.

“Reinstating the higher loan limits for FHA, Fannie Mae and Freddie Mac for mortgages in high-cost areas is also important and will help reduce inventory and improve liquidity in the overall mortgage market. The allocation of resources for neighborhood stabilization efforts to help communities purchase and rehabilitate foreclosed and vacant properties is also very promising for the housing market. This funding will help protect communities across the country and preserve home values from further decline.

“As the leading advocate for homeowners and the real estate industry, NAR will continue to address issues facing Americans who are trying to purchase a home, protect their current home or preserve investment opportunities in residential and commercial properties. NAR recognizes the efforts of the members of Congress who understand that without a housing recovery, an overall economic recovery is impossible.

“NAR believes that positive steps are being taken to improve the housing market and will continue to work with President Obama, Congress and regulators to make housing stabilization a key component of any federal recovery plans.”

Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the National Association of Realtors^®. Big gains in the South and Midwest offset modest declines in other regions.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.

Lawrence Yun, NAR chief economist, said the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” he said. “The biggest gains were in areas with the biggest improvements in affordability.”

NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record.² The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun added.

The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.

“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan said. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”

McMillan said some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers and extending it until the end of 2009, and making loan limit increases permanent. “We also need to direct funds in the Troubled Asset Relief Program to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit,” he said.

Yun said the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun said.

# # #

¹The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

NATIONAL ASSOCIATION of REALTORS®

 Posted Monday, 12 January 2009 | Digg This Article

by Howard S. Katz

1-12-09

          The current issue of the One-handed Economist features some very bearish patterns in the U.S. dollar.  This is the moment of truth for the establishment.  They are about to be destroyed, and they do not have a clue.

          For almost 4 months, they have been arguing that the U.S. economy is in a financial crisis of a “deflationary” nature.  They cited the very minor and normal commodity declines of this past summer as evidence.  They wildly exaggerated the real estate decline by shifting from one indicator to another, always picking the indicator which happened to be down that month.  Here is the actual median home price (U.S.) as reported by the Census Bureau.

 

          As you can see, housing prices did decline in 2007.  But they hit bottom in Jan. 2008, and have been flat to slightly higher since that time.  You can check these figures at www.census.gov/newhomesales.  You know what the media’s monthly reports on housing look like: DOWN 14%…DOWN 18%.  DOWN, DOWN, DOWN.

          How do they turn the rise from $216,000 in Jan. ’08 to $220,000 in Nov. ’08 into such a “decline?”  Well one month they may use the actual number above.  But the next month the number is bullish (not what they want); so they report the 12 month change.  In April ’08, both the one-month and the 12-month changes were positive.  So they forgot about April and reported the 3-month average (Jan., Feb. and March) for ’08 against the same 3 months for ’07.  This was reported immediately after the April figures were released.  Everyone expected the report to be about the April figure.  But the April figure was up and hence was not reported.

          When they are really under fire, they switch to the Case-Shiller index.  It has a 10 city and a 20 city.  That gives 2 more figures, one of which (the 1 month or the 12 month) is likely to be down.

          And yet the real news about housing prices in 2008 was that the decline of 2007 was stabilized suggesting that housing might be ready for a turn to the upside.  To avoid drawing this optimistic conclusion, your newspaper did not technically lie.  But it slanted the reports so that you would draw the wrong conclusion.  It did not lie technically, but it lied in substance.

          Write to the editor of your local paper, and tell him that he has been lying to you about housing prices.  What use is a newspaper that lies?  No use at all.  Throw it in the trash and spend your time seeking the real truth.

          The truth shall make ye rich.  The establishment shall make ye poor.

          If the establishment is correct, then no one in his right mind should buy commodities at this time.  According to these people a wave of deflation has come out of nowhere, and all prices will be going down.  According to the One-handed Economist a wave of “deflation” can only come from a decline in the money supply, and all declines (or advances) in the money supply in history have been caused by the government.  Further, the One-handed Economist points out that the U.S. Government, over the past 4 months, has started its greatest money expansion in history.  Since Sept. ’08, Federal Reserve credit is up by 150%, and the monetary base is up by 100%.  The money supply proper will take some time because it is largely created by the private banking system, and this moves more slowly.

          Furthermore, although exact timing is less certain, I am fairly confident that bottoms are in for many commodities.  Gold bottomed Oct. 24.  Cocoa bottomed Oct. 24.  Platinum bottomed Oct. 27.  Silver bottomed Oct. 28.    The CRB index bottomed Dec. 5.  Corn, wheat and soybeans bottomed Dec. 5.  Coffee bottomed Dec. 5.  Unleaded gasoline bottomed Dec. 24.  And crude oil bottomed Dec. 26.  The establishment seems not to have noticed, but many commodities have been in uptrends since the turn of the millennium.  For them to have 5-7 month declines is completely normal and does not indicate a reversal of trend.  Just the opposite, what indicates a long term top in a commodity is a spike top, such as occurred in gold on Jan. 21, 1980.

          I have pointed out that all of the establishment’s evidence for a general “deflation” is of the self-fulfilling variety.  The newspapers report that there is going to be a decline in such and such an area of the economy.  An executive in the advertising department of a retail outlet reads this and decides to cut back on his newspaper advertising.  Therefore his store pulls in fewer customers and records lower sales for the Christmas season.  Another executive lays off workers in anticipation of a slower period.  Over and over the media makes their gloomy forecasts come true, at least for the short term.  So, you see, they can make up any lie at all, and the self-fulfilling aspect will make it appear to be true.

          However, we know what happens to these self-fulfilling prophecies.  They come true for a short period of time.  Then the basic demand of the people for goods breaks through.  All the indicators rebound.  It turns out that the economy is not caught in a wave of “deflation.”  It is caught in a wave of “inflation.”

          Since Ben Bernanke is so obsessed with what is conventionally called the Great Depression, let us give some attention to this event.  Bernanke, and all other establishment figures believe that this was a wave of “deflation” which simply came out of nowhere.  They believe that such waves are inherent in a free economy.  But the “deflation” of 1930-33 did not come out of nowhere.  It was engineered by the Republicans.  In 1920, the Republicans, observing that prices had doubled during WWI, decided that it would be good policy to bring them back down again.  Since cigars had gone from 5¢ to 10¢ during the war, this policy of restoring the pre-WWI price level was expressed as, “What this country needs is a good 5¢ cigar.”

          First, this policy had been implemented after the price increases of the Civil War, and it had been very successful.  It made the United States the richest country in the history of the world.  Second, this policy had been very popular.  The Republicans became the dominant party at this time, and the only Democrat who could get elected (Grover Cleveland) had a Republican economic policy (gold standard).

          The Republicans’ logic was very compelling.  All the savers in the country had been cheated by the WWI depreciation of the currency.  The currency had to be restored to its true value in order to make the savers whole.  The Republicans were the party of the savers, and the savers were the large majority of the country.

          The Democrats of that day cried, “What about the unemployed?”  But the Republicans knew about the unemployed.  They were basing their policy on what had happened after the Civil War.  And after the Civil War there had been a “depression” (1873-79) almost as bad as that of 1930-33.  Unemployment had soared during this period.  The Republicans made two points.  First, there were a lot more savers than unemployed; so their policy was for the benefit of the majority of the people.  Second, the fact that the savers and the unemployed had different interests was temporary.  It resulted from the fact that the Democrats had done wrong by depreciating the currency during the war.  The unemployment of the 1930s was caused by the Democrats when they printed money to finance WWI.  Further, the unemployment of the 1870s had been temporary, and that of the 1930s proved temporary as well.  But the harm to the nation’s savers which started after 1933 was permanent and had devastating effects on the U.S. economy.

          So here is a policy which not only was consciously and deliberately adopted by the Government, but the policy was right and was for the greater good of the country.  For Bernanke to argue that this was something that just came out of the sky and was bad shows that he does not have the slightest concept of what is going on in economics.  If one actually studies economics, one finds that all price declines in American history were caused by declines in the money supply, which in turn were caused by the government.  There has never been a liquidity trap where people had money but just decided not to spend it.

          If there is intelligent life on Mars and a Martian were to visit America, he might point out, “Gee, you people have had rising prices for 53 years consecutively.  The last year in which prices went down was 1955.  I think you should be worried about prices going up, not down.”  And he might also point out, “Further, 1955 is celebrated in your popular culture as Happy Days.  Maybe declining prices are a good thing, not a bad thing.”  Certainly the decline in gasoline over the last half of 2008 (temporary as it is) was a good thing.  Maybe the President needs to appoint this Martian as his economic advisor.

          Since that time, the Democrats have posed as the defender of the unemployed, and anyone who argues against their policies is slandered as lacking sympathy.  First, they had “sympathy” for the minority of the people but completely lacked sympathy for the large majority.  Second, the leader of the Democrats at that time, F.D.R., was a Wall Streeter (manager of a vulture fund), and he just happened to adopt a policy which caused a large rise in the stock market.  (The DJI doubled from early ’33 to early ’34 and multiplied by almost 4 times by early ’37.)  He couldn’t admit that this was his intention.  He was pretending to be a traitor to his class.  The unemployed were a convenient post on which he could hang his hat.  He was trying to lower real wages.  This would reduce unemployment.  But he was trying to do it to increase the profits of the big corporations.  It was hardly in the best interest of the working man.

          Given that the supporters of Wall Street and the big corporations are now in control of the country and given that they have started a policy of a massive infusion of money, the question must be raised, how do you protect yourself?  After all, this is the same policy which has reduced Zimbabwe (the former Rhodesia) to famine and disease.  The first thing you have to do is to make a decision.  Are prices going up, or are they going down?  They can’t do both, and what you need to do in the one case is exactly the opposite of what you need to do in the other.  The media are lying to you because they represent the interests of Wall Street and the big corporations, and these people are trying to steal your wealth.  You have to see through this lie if you are going to protect yourself.

          I call myself the one-handed economist because this phrase comes from Harry Truman, who was fed up with the BS he was getting from F.D.R.’s economic advisors.  When Truman would ask a straight question, they would give him double talk.  “On the one hand…, but on the other hand.”  Truman got angry and said, “What this country needs is a good one-handed economist.”  Truman stopped the growth in the money supply and balanced the budget.  Eisenhower continued his policy.  Together they gave the country Happy Days.  Today, both parties are in the pocket of Wall Street, and they are trying to rob you blind.  Ben Bernanke is counterfeiter in chief.

Existing-home sales weakened against a backdrop of an eroding economy, according to the National Association of Realtors^®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 8.6 percent to a seasonally adjusted annual rate¹ of 4.49 million units in November from a downwardly revised level of 4.91 million in October, and are 10.6 percent below the 5.02 million-unit pace in November 2007.

Lawrence Yun, NAR chief economist, expected a decline. “The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level. We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001,” he said.

“It is, therefore, imperative to provide incentives for homebuyers to get back into the market. It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline – impediments remain for some buyers with good credit,” Yun said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.09 percent in November from 6.20 percent in October; the rate was 6.21 percent in November 2007. Last week, Freddie Mac reported the 30-year rate fell to 5.19 percent – the lowest on record since the series began in 1971.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said it’s crucial to enact sufficient housing stimulus to spark an economic recovery. “We need more than low interest rates to encourage enough buyers to enter the market and meaningfully draw down inventory, which would stabilize home prices – that, in turn, would help the economy to recover,” he said.

“We should extend the first-time buyer tax credit to all homebuyers and eliminate the repayment feature, and make permanent the higher loan limits that are vital in high-cost markets – the faster we do this, the faster housing and the economy can recover,” McMillan said.

McMillan said NAR is grateful that the Treasury, the Federal Housing Finance Agency and the Federal Reserve have been working to bring interest rates down on most mortgages to historic lows.

Total housing inventory at the end of November rose 0.1 percent to 4.20 million existing homes available for sale, which represents an 11.2-month supply² at the current sales pace, up from a 10.3-month supply in October.

Despite an overall softening in sales, there has been a solid trend of rising activity in California, Nevada, Arizona and Florida markets. “Sales are rising only in areas with large numbers of distressed properties as bargain hunters take advantage of discounted home prices,” Yun said.

The national median existing-home price³ for all housing types was $181,300 in November, down 13.2 percent from November 2007 when the median was $208,800. There remains a significant downward distortion in the current price from a large number of distress sales at discounted prices; the median is where half of the homes sold for more and half sold for less.

Yun cautioned that there will be negative consequences if housing stimulus is delayed. “Falling home prices would lead to faster contraction in consumer spending and further deterioration in bank balance sheets. More importantly, falling home values would lead to higher loan defaults, including those recently modified distressed mortgages.”

Single-family home sales fell 8.0 percent to a seasonally adjusted annual rate of 4.02 million in November from a level of 4.37 million in October, and are 8.8 percent below a 4.41 million-unit pace a year ago. The median existing single-family home price was $180,800 in November, down 12.8 percent from November 2007.

Existing condominium and co-op sales dropped 13.0 percent to a seasonally adjusted annual rate of 470,000 units in November from 540,000 in October, and are 23.1 percent below the 611,000-unit pace in November 2007. The median existing condo price⁴ was $185,400 in November, down 15.5 percent from a year ago.

Regionally, existing-home sales in the Northeast dropped 12.0 percent to an annual pace of 730,000 in November, and are 18.0 percent lower than a year ago. The median price in the Northeast was $257,700, down 0.1percent from November 2007.

Existing-home sales in the Midwest fell 7.4 percent in November to a pace of 1.00 million and are 16.0 percent below November 2007. The median price in the Midwest was $142,400, down 11.2 percent from a year ago.

In the South, existing-home sales dropped 10.9 percent to an annual pace of 1.64 million in November, and are 17.6 percent below a year ago. The median price in the South was $154,500, which is 10.6 percent lower than November 2007.

Existing-home sales in the West declined 4.3 percent to an annual rate of 1.12 million in November but are 17.9 percent higher than November 2007. The median price in the West was $242,500, down 25.5 percent from a year ago.

For more information, please visit: http://www.realtor.org/research/research/ehsdata

According to Global Insight’s calculations, prices are now 6.5 percent below their 2007 peak. They fell at a 6.9 percent annual pace affecting 241 of the 330 metropolitan areas analyzed by Global Insight. That’s up from 150 metro areas affected in the second quarter.

Contraction is most severe in the Southeast and Southwest with only the Pacific Northwest remaining overvalued, Global Insight says.

Home prices fell more than 10 percent in the third quarter in nine central California communities. The Central Valley communities of Merced, Stockton, and Modesto have seen property values fall to less than half their 2005 value. Twenty-nine metro areas in California, Florida, and Nevada – at one time among the most overvalued – have seen price declines in excess of 30 percent. Similar steep price drops are occurring in Michigan, northeast Ohio, the southern metro areas from Charlotte to Atlanta, as well as in New England.

“Weak economic conditions and wary consumers continue to hold the housing market back. Although many areas are seeing home sales increase, it is largely due to foreclosure homes being snapped up at significantly discounted prices. As the inventory of these homes is removed from the market, prices will remain on a downward path,” predicts Jeannine Cataldi, senior economist and manager of Global Insight’s Regional Real Estate Service.

Source: Global Insight (12/03/2008)