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Existing-Home Sales Rally

Existing-home sales in February rallied, bouncing back from a slog at the start of the year, the National Association of REALTORS® (NAR) reports. Sales increased 3 percent to 5.54 million, marking a 1.1 percent increase from one year prior.

Inventory increased, as well, 4.6 percent to 1.59 million, but remained 8.1 percent lower than one year prior.


“A big jump in existing sales in the South and West last month helped the housing market recover from a two-month sales slump,” says Lawrence Yun, chief economist at NAR. “The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018; however, even as seasonal inventory gains helped boost sales last month, home prices—especially in the West—shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

Currently, inventory is at a 3.4-month supply. Existing homes averaged 37 days on market in February, four days less than one year prior. All told, 46 percent of homes sold were on the market for less than one month.

The metropolitan areas with the fewest days on market and most realtor.com® views in February, according to realtor.com’s Market Hotness Index, were San Francisco-Oakland-Hayward, Calif.; Midland, Texas; Vallejo-Fairfield, Calif.; San Jose-Sunnyvale-Santa Clara, Calif.; and Sacramento-Roseville-Arden-Arcade, Calif.

The median existing-home price for all types of houses (single-family, condo, co-op and townhome) was $241,700, a 5.9 percent increase from one year prior. The median price of an existing single-family home was $243,400, while the median price for an existing condo was $227,300.

Existing-home sales in the single-family space came in at 4.96 million in February, a 4.2 percent increase from 4.76 million in January and a 1.8 percent increase from 4.87 million one year prior. Existing-condo and -co-op sales, however, came in at 580,000, a 6.5 percent decrease from January and a 4.9 percent decrease from one year prior.

Twenty-four percent of existing-home sales in February were all-cash, with 15 percent by individual investors. Four percent were distressed.

Two of the country’s major regions had higher sales, rising 5.5 percent to 2.41 million in the South, with a median price of $215,700; and 11.4 percent to 1.27 million in the West, with a median price of $370,600. The Midwest and Northeast had reduced sales, falling 2.4 percent to 1.22 million in the Midwest, with a median price of $179,400; and 12.3 percent to 640,000 in the Northeast, with a median price of $258,900.

“The unseasonably cold weather to start the year muted pending sales in the Northeast and Midwest in January and ultimately led to their sales retreat last month,” Yun says. “Looking ahead, several markets in the Northeast will likely see even more temporary disruptions from the large winter storms that have occurred in March.”

First-time homebuyers comprised 29 percent of existing-home sales in February, unchanged from January.

“REALTORS® in several markets note that entry-level homes for first-timers are hard to come by, which is contributing to their underperforming share of overall sales to start the year,” says NAR President Elizabeth Mendenhall. “Prospective buyers should start conversations with a REALTOR® now on what they want in a new home. Even with the expected uptick in new listings in coming months, buyers in most markets will likely have to act fast on any available listing that checks all their boxes.”

For more information, please visit www.nar.realtor.

For the latest real estate news and trends, bookmark RISMedia.com.

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Buyers Confronting ‘Perfect Storm’: Trulia

First-time homebuyers are in for it this spring, with an all but depleted inventory at their price point, according to the Q1 2018 Inventory and Price Watch from Trulia. Their challenges, however, are more than scarcity.

“First-time homebuyers face a perfect storm this spring,” says Cheryl Young, senior economist at Trulia. “Affordable, move-in ready starter homes have become harder to find amid rising home prices and mortgage rates. While new-home construction hit a 10-year high in 2017, these units have not translated into starter-home inventory just yet.”

Entry-level home prices have risen 9.6 percent since the first quarter of 2017, according to Trulia, and inventory in the segment shrunk 14.2 percent just in the first quarter of 2018. The average buyer would need 41.2 percent of their income to purchase a starter today.

“Builders are focusing on the more upper-middle or premium home segments—mostly because of returns on investments,” Young says. “Though builder sentiment is quite high, they have some headwinds around a shortage of labor. The focus now is trying to maximize their return, and, unfortunately, it’s not at the bottom of the market.”

In general, inventory has risen 3.3 percent, but is being driven mostly by the premium segment, which added 13.3 percent supply year-over-year. Breaking down the data:


In addition to affordability constraints, the condition of entry-level homes is fading. Compared to entry-level homes in 2012, the average entry-level home is nine years older, and more are becoming classified as fixers—an 11.2 percent share today, versus a 10.3 percent share in 2012. Moreover, entry-level homes have 2 percent less square feet (down to 1,187 square feet from 1,211 square feet). Why?

“What’s actually out there is getting tighter, and what may have been on the cusp of the starter/trade-up is now trade-up—everything is starting to spread,” says Young. “What’s filtering down in the starter home market now is the smallest, oldest, lower-quality homes.”

For more information, please visit www.trulia.com.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Fed Hikes Rates—How Many More Are to Come?

The Federal Reserve carried out its first hike of 2018 on Wednesday, increasing interest rates one-quarter percentage point and leaving open the possibility of more raises this year. The action was anticipated by the market, which has been on a robust—and, at times, rollercoaster—run.

“In view of realized and expected labor market conditions and inflation, the [Federal Open Market] Committee decided to raise the target range for the federal funds rate to 1-1/2 to 1-3/4 percent,” according to a Fed statement. “The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.”

The decision is the first under Fed Chair Jerome Powell, and follows growing wages and a heaping of jobs introduced to the labor pool.

Analysts are divided on exactly how many increases will occur this year. Many expect the Fed to limit it at three; others, accounting for inflation pressures and the recent stimulus, are entertaining the idea of four.

What does the hike mean for mortgage rates? Borrowing costs can grow. According to Freddie Mac, the average 30-year, fixed mortgage rate last week was 4.44 percent—a dip from the prior week, but nonetheless on a tear. Affordability has lessened as a result.

“We are in the middle innings of monetary policy normalization,” said Lawrence Yun, chief economist of the National Association of REALTORS® (NAR), in a statement. “Interest rates that the Fed directly controls—the federal funds rate—were raised three times in 2017. [This] action is the first of three rate hikes in 2018. Another three hikes are likely on deck in 2019. Mortgage rates do not move one-to-one with the Fed tightening, but clearly consumers should anticipate higher mortgage rates as time proceeds.

“The tight labor market will hurry-along the Fed to raise rates,” Yun said. “Housing costs are also rising solidly and contributing to faster inflation. The one thing that could slow the pace of rate increases would be to tame housing costs through an increased supply of new homes. Not only will more home construction lead to a slower pace of rate hikes, it will also lead to faster economic growth. Let’s put greater focus on boosting home construction.”

The Fed will meet next in June.

Stay tuned to RISMedia for more developments.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Exactly How Big Is the Military Market?

The following information is provided by the Center for REALTOR® Development (CRD).

Current and former military are a huge demographic segment in the U.S.

According to the most recent Demographics Report (2015) from Military OneSource, prepared for the U.S. Department of Defense (DoD) across active duty and reserve populations, there are 2.1 million military personnel. Over half are married, and 41 percent have children. Add to that the 2.7 million additional family members of these individuals, and you’ve got a total of about 5 million people. Of these, 87.5 percent (roughly 4.4 million) reside in the U.S.

The 10 states with the highest populations of active military personnel include (in order): California, Virginia, Texas, North Carolina, Georgia, Florida, Washington, Hawaii, South Carolina, and Colorado. Military families move every two to three years. Ten moves over a 20-year career are not unusual.

Add active duty military to the 21.3 million veterans in the U.S., according to the U.S. Census Bureau, and you get a total of 25.7 million military-related individuals living in the United States. The U.S. population for 2015 was 321 million.

So, at a national level, former and current military comprise 8 percent of the general public. That’s approximately one out of every 12 people. In some states, the percentage is even higher—for example, in Alaska, 14 percent of the population are veterans.

A quarter of the country’s veterans live in rural areas. Generally-speaking, they prefer smaller metro areas near military bases over larger cities. Veterans are homeowners at a much higher rate than the general public, and this is borne out by the research done by NAR’s Research & Statistics division in its annual Profile of Home Buyers and Sellers.

According to NAR’s Economist’s Outlook Blog, the percentage of recent homebuyers who were military or veterans for 2017 was 21 percent. What that means is that the military and veterans are purchasing homes at a rate that is roughly twice that of their proportion within the general population.

Here are some other interesting related findings that emerged from NAR’s 2017 Profile of Home Buyers and Sellers:

  • On average, active-duty servicemember buyers were typically 34 years old, and veteran buyers were 59 years old.
  • When searching for their home, 90 percent of active-duty servicemembers and 84 percent of veteran homebuyers bought their home through a real estate agent or broker.
  • The median price of a home active-duty military bought was $252,000, and $230,000 for veterans.
  • Ninety-six percent were satisfied with their home-buying process.

For even more information about active-duty servicemembers and veteran homebuyers, see the Highlights From the 2017 Profile of Home Buyers and Sellers.

To ensure real estate practitioner success in any geographic area, an awareness of the military market and an understanding of how to meet their needs cannot be understated. Learning how to serve the military market starts with understanding their needs, wants, concerns, and learning about the processes and procedures that they face.

For more education about serving the military market, check out this month’s featured online course for 25 percent off at the Center for REALTOR® Development, the Military Relocation Professional (MRP) Certification Course, which is the educational requirement for NAR’s Military Relocation Professional (MRP) certification.

For more information, please visit RISMedia’s online learning portal from NAR’s Center for REALTOR® Development (CRD) and the Learning Library. Here, real estate professionals can sign up for online professional development courses, industry designations, certifications, CE credits, Code of Ethics programs and more. NAR’s CRD also offers monthly specials and important education updates. New users will need to register for an account.

For the latest real estate news and trends, bookmark RISMedia.com.

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