According to a National Association of Realtors September, 2011 report, U.S. existing home sales jumped 7.7% to a 5.03 million-unit rate in August and a five-month high. That was much stronger than the 4.67 million rate in July and the 4.75 million consensus expectation that Standard & Poor’s had reported.  Also, the inventory of unsold homes fell 3.0% to 3.577 million units in August, while the months’ supply dipped to 8.5 months from 9.5 months in July.  Prices, however, dropped. The median home price fell to $168,300 in August, from $174,000 in July. On an annual basis, prices declined 5.1%.

Existing condominium and co-op sales were up 1.8% in August, and single-family home sales rose 8.5%. First-time home buyers accounted for 32% of sales in August, the same number as in July. Cash transactions were also unchanged on a month-to-month basis, at 29% of sales.  Importantly, overall distressed sales rose to 31% of total sales in August from 29% in June.

New Home Sales Drop Again

New home sales dropped for the fourth month in a row in August. Sales were down 2.3% from July’s level, to a seasonally adjusted annual rate of 295,000 homes, according to a September 26 U.S. Census Bureau report. On an annual basis, prices were up 6.1%. The median price of new houses sold was $209,100, while the average price was $246,000. The inventory of new homes for sale amounted to 162,000 at the end of August, which epresents a 6.6-month supply.  Interestingly, the New York condo market is about 165-170% above its 1995 level.

Mortgage Default Rates Hold Steady

A September 20th, S&P Report measured changes in consumer credit defaults. The indices showed first and second mortgage default rates remained almost flat, with the first mortgage rate moving down from 1.93% in July to 1.92% in August and the second mortgage rate up from 1.25% to 1.27%. The first mortgage index showed default rates at their lowest in four years. The second mortgage index was close to its lowest level in five years (July’s rate was the lowest). First mortgage default rates peaked in May 2009 at 5.67%; second mortgage default rates had peaked two months earlier at 4.66%.  According to the Mortgage Bankers Association, mortgage applications increased 0.6% during the week ending September 16, 2011.  The refinance share of mortgage activity rose to 78.3% of total applications, from 76.8% a week earlier. Adjustable-rate mortgage activity decreased to 6.7%, from 7.3% of all applications the previous week. The average interest rate for conforming 30-year fixed-rate mortgages was unchanged at 4.29%, while the average rate on 15-year fixed-rated home loans fell to 3.56% from 3.52%.