Today the National Association Of Realtors released their monthly existing home sales report and the numbers showed a decline of 3.7% in sales compared to the previous month.
Total existing-home sales retreated 3.7% to 5.48 million in February from 5.69 million in January.
The myth that low inventory is preventing sales continues to be expounded by the housing analysts. Low inventory seems to be the favorite whipping boy when the experts overestimate future sales. What they conveniently forget to mention (because it wouldn’t be good marketing) is that we are showing good year over year growth and the trend in sales is heading to the best levels of the cycle, even though inventory is down once again.
NAR Research @NAR_Research
Despite last month’s decline, February’s sales pace is still 5.4% above a year ago.
For 2017, I predicted 5.45 million in total existing home sales, slight growth in mortgage demand but falling cash percentage of buyers (into the teen levels). I have been right on mortgage demand. Last year at this time, we had 25% plus year over year growth in purchase applications.This year we have prints of 0.01% to 6% year over year growth, so mortgage demand is slightly higher this year. To put this in perspective however, we are only back to 1998 levels. We are back to 1998 levels even with a long economic expansion, mortgage rates below 5% since early 2011, 165 million people working, unemployment claims at 44 years lows and job openings at 5.6 million.
From Calculated Risk
The more interesting story line for 2017 is the come back of cash buyer as a % of the buyers.
First-time buyers were 32% of sales in February; Investors purchased 17% of homes; All-cash sales were 27%; Distressed sales were 7%
While distress sales are falling, the percentage of cash buyers is growing year over year. We have had prints of 23% and 27% of cash buyers so far this year, percentages that are abnormally high especially considering that distress sales are falling.
To me this more due to a lack of real growth from the mortgage buyer which still hasn’t partied like it was 1999 yet.
However, slight growth in mortgage purchase application demand and over 20% prints for cash buyers as a % of sales will make 2017 the highest year in existing home sales and mortgage demand in this cycle.
From Doug Short
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami