RealtyTrac: Existing-Home Sales Improved During First Three Quarters

Posted by Patrick Barnard on November 09, 2015 No Comments
Categories : Residential Mortgage

So far, it has been a fairly good year for existing-home sales, especially compared with previous years, a new report from RealtyTrac shows.

The firm's Q3 2015 U.S. Home Sales Report shows that 2,487,664 existing single-family homes and condos were sold during the first three quarters of this year – the highest level for the first nine months of a year since 2006.

Rising home prices helped drive the increase in existing-home sales. The average sale price of a single-family home or condo during the third quarter was $263,976, an increase of 0.2% compared with the previous quarter and an increase of 2.4% compared with the third quarter of 2014.

RealtyTrac's data, however, shows that home price appreciation continued to slow in the third quarter. In fact, the third quarter saw the slowest year-over-year price appreciation in any quarter since home prices bottomed out in the first quarter of 2012, the firm reports.

As home prices increase, it is bringing many properties out from underwater. Furthermore, it is helping homeowners realize bigger profits when they do sell.

According to RealtyTrac's research, homeowners who sold during the third quarter realized an average price gain of $40,658 from the purchase price of their property – the highest since the third quarter of 2007.

‘An increasing number of homeowners in 2015 have been cashing out the home equity they've gained during the housing recovery of the past three years,’ says Daren Blomquist, vice president at RealtyTrac, in a statement. ‘That may be a good decision because the data points to a plateauing market going forward. Home price appreciation is slowing – a trend that will continue if interest rates rise in the coming months as expected. Meanwhile, the threat of rising interest rates combined with lowered premiums for buyers using Federal Housing Administration (FHA) loans is spurring more demand.’

The report shows that the share of FHA loans has increased this year. In the third quarter, FHA-backed loans accounted for 23.4% of all single-family home and condo sales – up from 23.2% in the second quarter and up from 17.9% in the third quarter of 2014 to reach the highest share since the second quarter of 2012.

The recent cut to FHA's insurance premiums, coupled with the fact that the program lets borrowers put down as little as 3%, has helped boost the share of FHA-backed loans in recent months.

Metropolitan areas with the highest share of FHA loans in the third quarter included Bakersfield, Calif. (41.3%); Modesto, Calif. (40.4%); McAllen, Texas (39.7%); Las Vegas (37.1%); Riverside, Calif. (37%); and Dayton, Ohio (29%).

‘Home sales in the third quarter saw an increase in first-time home buyers in the area,’ says Michael Mahon, president of HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio.

He adds that the benefits of FHA-backed loans – which now account for ‘nearly a third of the overall purchase transactions across the state’ – combined with low interest rates and the tax benefits of homeownership ‘continue to be driving factors for home buyers to elect to purchase, versus renting.’

‘Seeing greater homeownership in communities, as compared [with] vacancies a few years ago, is providing notable increases in equity for all homeowners to enjoy,’ Mahon says.

For more, including a list of the counties where home sellers saw the highest profits during the third quarter, click here.

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