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56 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t local edition ANALYTICS existing-Home sales continue to spiral down The NAR offeRed TheiR NumbeRs foR exisTiNg home sAles, seeiNg A coNTiNuAl decliNe. CALIFORNIA // Existing-home sales dipped on both a monthly and annual basis in November, marking the first year-over-year decline in sales in nearly two and a half years. The National Association of Realtors (NAR) calculated an adjusted annualized sales rate of 4.90 million for existing homes last month, representing a drop from 5.12 million in October and 4.96 million in November 2012. The figure includes completed transactions of single-family homes, townhomes, condomini- ums, and co-ops. According to the group, it was the first time in 29 months that sales fell below year-ago levels. Singling out single-family home sales, transactions were at an adjusted pace of 4.32 million, down 3.8 percent month-over- month (from 4.49 million) and 0.9 percent year-over-year (from 4.36 million). Explaining the decline, NAR chief economist cited the usual factors. "Home sales are hurt by higher mortgage interest rates, constrained inventory, and con- tinuing tight credit," he said. Total housing inventory, as of November 30 was an estimated 2.09 million existing homes available for sale, representing a 5.1 month supply at the current sales pace. While inventory was down, the slower rate of sales brought months' supply up from 4.9 in October. The median time on mar- ket for all homes was 56 days in November, up from 54 in October but well below the 70 day median recorded a year ago. Tighter inventory was one factor providing lift to the median existing-home price in November, which was up 9.4 percent year-over-year to $196,300. Compared to October, the median price was down 1.6 percent. As far as the challenge of tight credit is concerned, NAR expects new underwriting regu- lations—scheduled for implemen- tation January 10—will impact some borrowers at the outset, affecting sales. However, the as- sociation remains optimistic. "[The new rules mean] quali- fied borrowers are getting a loan that they are very likely to be able to repay, but some borrow- ers may wind up paying much more for their mortgage, or not get a loan at all due to the tougher standards," said NAR president Steve Brown. "The new rules may tighten credit too much, but we're hopeful regula- tors will make adjustments if this proves to be true." Existing-home sales dropped compared to October in all regions, falling 3.0 percent in the Northeast, 4.1 percent in the Midwest, 2.4 percent in the South, and 8.5 percent in the West. Median prices were higher in all four regions compared to November 2012. Unrealistic rate expectations threaten Housing recovery RedfiN ANAlysTs woNdeR if homebuyeRs ARe beiNg seTup foR A leTdowN. WASHINGTON // Despite a reported rise in homebuyer con- fidence in the third quarter—the first this year—unrealistic mort- gage rate expectations could lead the housing recovery astray as the Federal Reserve looks to ease its stimulus program, according to recent reports from Redfin, a national real estate broker and technology provider. Twenty-eight percent of homebuyers said now is a good time to buy a home, up 4 percentage points from last quarter, according to Redfin's Real-Time Buyer Survey conducted in November. Another 58 percent of buyers said now is an "ok" time to purchase a home, down just 1 percentage point from last quarter's 59 percent, according to Redfin. Low inventory remained a top concern with 60 percent of survey respondents citing this concern. Rising prices was also a popular concern, cited among 52 percent of survey respondents. Rising mortgage rates popped up as a concern among 53 percent of survey respondents in last quarter's survey and then dropped to 41 percent this quarter. However, Redfin finds consumer attitudes toward interest rates quite troublesome. A majority 83 percent; of buyers believe a "normal" interest rate for a fixed-rate, 30-year mortgage loan is less than 5 percent. Furthermore, a significant portion of homebuyers—42 percent—say they "would be unable or unwilling to buy a home if rates rose further." In contrast to what today's consumers view as "normal," the average mortgage rate since 1990 is 6.7 percent, according to Redfin. In fact, rates did not fall below 5 percent until March 2009. However, only 5 percent of homebuyers view a mortgage rate above 6 percent as "normal," according to Redfin's survey results. "Even more surprising, both seasoned and first-time buyers think a rate below 5 percent is normal," Redfin said. One in three first-time buyers view a rate below 4 percent as normal, while one in four seasoned buyers view a rate below 4 percent as normal. While the market awaits news on when the Fed will taper its stimulus program, thus allowing mortgage rates to rise, Redfin says this summer's activity is a good preview of what may come. While the market awaits news on when the Fed will taper its stimulus program, thus allowing mortgage rates to rise, Redfin says this summer's activity is a good preview of what may come.