All-Cash Sales Dropped to Lowest in 3 Years

2024-04-24T13:40:18-05:00

NAHB analysis of the most recent Quarterly Sales by Price and Financing report reveals that the share of new home sales backed by VA loans climbed substantially in the first quarter of 2024, while all-cash sales share fell by nearly 30%. However, the median purchase price of homes bought with cash continued to increase in the first quarter of 2024. Since the Federal Reserve began raising interest rates in early 2022, the share of all-cash new home sales has increased significantly, with an average of 8.8% amid this tightening cycle. The interest rate hikes have caused the average mortgage rate to more than double since Q4 2021, as the average rate surged from 3.08% to 6.8% over the three years ending Q1 2024. The chart below illustrates how much more sensitive the all-cash share has become to changes in the federal funds rate since 2017. However, after peaking at 10.7% in the fourth quarter of 2024, the all-cash share has trended downward. Although cash sales make up a small portion of new home sales, they constitute a larger share of existing home sales. According to estimates from the National Association of Realtors, 28% of existing home transactions were all-cash sales in March 2024, down from 33% in February, but up from 27% in March 2023. The share of FHA-backed sales rose from 13.5% to 13.8% in the first quarter of 2024. Despite the substantial increase, the share remains below the post-Great Recession average of 17.0%. Meanwhile, the share of HA-backed sales also increased, climbing from 4.3% to 6.1%, the highest level since the second quarter of 2022. In contrast, conventional loans financed sales fell slightly from 73.8% to 73.5%. Price by Type of Financing Different sources of financing also serve distinct market segments, which is revealed in part by the median new home price associated with each. In the first quarter, the national median sales price of a new home was $420,800. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans, and cash were $472,300, $350,800, $359,200, and $432,800, respectively. The purchase price of new homes financed with conventional and VA loans declined over the past year, while the price of homes financed with VA loans and cash increased. The largest gain occurred in cash sales prices, which rose 14.5% over the year. This is in stark contrast to year-over-year price changes in the first quarter of 2022 and 2023 (see below). Discover more from Eye On Housing Subscribe to get the latest posts to your email.

All-Cash Sales Dropped to Lowest in 3 Years2024-04-24T13:40:18-05:00

Existing Home Sales Decline in March

2024-04-18T12:21:06-05:00

After reaching the 12-month high last month, existing home sales retreated in March due to lingering high mortgage rates, according to the National Association of Realtors (NAR). Meanwhile, low resale inventory and strong demand continued to drive up existing home prices, marking the ninth consecutive month of year-over-year median sales price increases. Eventually, mortgage rates are expected to decrease gradually, leading to increased demand in the coming quarters. However, that decline is dependent on future inflation reports. Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, declined 4.3% to a seasonally adjusted annual rate of 4.19 million in March (as shown below). On a year-over-year basis, sales were 3.7% lower than a year ago. The first-time buyer share rose to 32% in March, up from 26% in February 2023 and from 28% in March 2023. The inventory level rose from 1.06 million in February to 1.11 million units in March and is up 14.4% from a year ago. At the current sales rate, March unsold inventory sits at a 3.2-months supply, up from 2.9-months last month and 2.7-months a year ago. This inventory level remains very low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction. Homes stayed on the market for an average of 33 days in March, down from 38 days in February but up from 29 days in March 2023. The March all-cash sales share was 28% of transactions, down from 33% in February but up from 27% a year ago. All-cash buyers are less affected by changes in interest rates. The March median sales price of all existing homes was $393,500, up 4.8% from last year. This marked the highest recorded price for the month of March. The median condominium/co-op price in March was up 5.8% from a year ago at $357,400. Existing home sales in March were mixed across the four major regions (as shown below). Sales in the Midwest, South, and West decreased 1.9%, 5.9%, and 8.2% in March, while sales in the Northeast rose 4.2%. On a year-over-year basis, all four regions saw a decline in sales, ranging from -1.0% in the Midwest to -5.0% in the South. The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 75.6 to 74.4 in February. On a year-over-year basis, pending sales were 7.0% lower than a year ago per the NAR data. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Existing Home Sales Decline in March2024-04-18T12:21:06-05:00

Home Prices Increase for January

2024-03-27T11:15:18-05:00

The S&P CoreLogic Case-Shiller U.S. National Home Price Index (HPI), reported by S&P Dow Jones Indices, rose at a seasonally adjusted rate of 4.36%. Although this rate has been slowing the previous four months, January saw its first uptick from 2.32% in December 2023.   On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 6.03% annual gain in January, following a 5.57% increase in December. The year-over-year rate has been increasing since May of 2023, and is at its highest since December of 2022.  Meanwhile, the Home Price Index released by the Federal Housing Finance Agency (FHFA), declined at a seasonally adjusted annual rate of -0.86% in January, following a 1.1% increase in December. On a year-over-year basis, the FHFA Home Price NSA Index rose 6.33% in January, down from 6.63% in the previous month.  In addition to tracking national home price changes, S&P Dow Jones Indices also reported home price indexes across 20 metro areas in January on a seasonally adjusted basis. While seven out of 20 metro areas reported negative home price appreciation, 13 metro areas had positive home price appreciation. Their annual growth rates ranged from -5.53% to 18.80%. Among all 20 metro areas, only four metro areas exceeded the national average of 4.36%. San Diego has the highest rate at 18.80%, followed by Washington, DC at 10.74%, and Charlotte with a 6.46% increase. The six metro areas that experienced price declines were Denver (-5.53%), Phoenix (-4.16%), Cleveland (-1.74%), Seattle (-1.47%), Portland (-1.37%), Detroit (-1.04%), and Miami (-.25%). 

Home Prices Increase for January2024-03-27T11:15:18-05:00

Existing Home Sales Surge to One-Year High in February

2024-03-21T13:23:20-05:00

Despite the rising mortgage rates witnessed in February, existing home sales continued to improve and climbed to a 12-month high, according to the National Association of Realtors (NAR). However, low resale inventory and strong demand continued to drive up existing home prices, marking the eighth consecutive month of year-over-year median sales price increases. Recent declines in mortgage rates and a continued improvement in inventory are expected to drive more demand in the coming months. Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 9.5% to a seasonally adjusted annual rate of 4.38 million in February (as shown below). However, on a year-over-year basis, sales were 3.3% lower than a year ago. The first-time buyer share fell to 26% in February, down from 28% in January 2023 and from 27% in February 2023. The inventory level rose from 1.01 million in January to 1.07 million units in February and is up 10.3% from a year ago. At the current sales rate, February unsold inventory sits at a 2.9-months supply, down from 3.0-months last month but up from 2.6 months a year ago. This inventory level remains very low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction. Homes stayed on the market for an average of 38 days in February, up from 36 days in January and 34 days in February 2023. The February all-cash sales share was 33% of transactions, up from 32% in January and 28% a year ago. All-cash buyers are less affected by changes in interest rates. The February median sales price of all existing homes was $384,500, up 5.7% from last year. This marked the highest recorded price for the month of February. The median condominium/co-op price in February was up 6.7% from a year ago at $344,000. Existing home sales in February were mixed across the four major regions (as shown below). Sales in the Midwest, South, and West increased 8.4%, 9.8%, and 16.4% in February, while sales in the Northeast remained unchanged. On a year-over-year basis, all four regions saw a decline in sales, ranging from -1.2% in the West to -7.7% in the Northeast. The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 78.1 to 74.3 in January. On a year-over-year basis, pending sales were 8.8% lower than a year ago per the NAR data.

Existing Home Sales Surge to One-Year High in February2024-03-21T13:23:20-05:00
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