Morning Report: Median home price up 19% according to NAR

Vital Statistics:

 LastChange
S&P futures4,16814.8
Oil (WTI)63.441.47
10 year government bond yield 1.61%
30 year fixed rate mortgage 3.18%

Stocks are higher this morning on overseas strength. Bonds and MBS are up.

Existing home sales fell 2.7% in April, according to NAR. The median home price rose 19.1% (!) to $341,600. Not sure what to make of that number. I am guessing that the lower price tier is completely picked over, and people are reaching for luxury properties, but who knows? The median price a year ago was $286,600 so perhaps that number was depressed a little? Year-over-year comparisons are going to be a bit wonky across the board for the next few months.

The seasonally-adjusted annual pace of sales hit 5.85 million, which was up big compared to lockdown-depressed numbers a year ago. There were only 1.2 million units in inventory, which represents a 2.4 month supply. These are record lows going to back to the early 80s. Days on market fell to 17.

First time homebuyers represented 31% of sales, and they are struggling to compete with cash buyers and investors who are snapping up properties. All-cash transactions were 25% of sales compared to 15% a year ago.

Delinquencies fell below 5% in April, according to Black Knight’s First Look. Total delinquencies fell to 4.66%, which is down 7% from March and 28% from a year ago. 30 day DQs did tick up compared to March however. Foreclosure starts were only 3,700, however that is being affected by the foreclosure moratorium. Once that is lifted, we should see a wave of foreclosures as there are 1.8 million loans in the seriously delinquent status. This is an increase of 1.3 million from a year ago.

If we do see an uptick in foreclosures, the big difference from 2010 would be the home equity. Anyone who bought a home 2 or 3 years ago should have enough equity to sell the home, close out the existing mortgage, and move somewhere cheaper.

Despite a tight inventory picture, RE/MAX reported that April was the strongest in 13 years. RE/MAX reported that there was only 1.1 month’s worth of inventory, and home prices increased 5.9%. Days on market hit a low at 32. “Even with rising home prices, super-quick turnarounds, and fierce competition for available listings, April 2021 saw more home sales than any April in at least 13 years. That’s a clear reflection of overwhelming demand and the resilience of today’s buyers,” said Adam Contos, CEO of RE/MAX Holdings, Inc. “The 32 Days on Market average – a report record – is noteworthy, too. Many listings are being snapped up the day they go on sale – or within just a few days. That pace underscores the importance of an experienced professional who can guide you to smart decisions and quick action – on either side of the transaction.”

Note how much the RE/MAX numbers differ from NAR. 19% home price appreciation versus 6%, 32 days on market versus 17.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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