NAR Existing Home Sales Reaction: The Hunt for Prospective Buyers in a Low Inventory Atmosphere

February 22, 2018 Raymond Bartreau

Wednesday, the National Association of REALTORS (NAR) published their January 2018 Existing Home Sales1 statistics with data indicating the year is off to a weak start. Existing home sales are at their lowest in an annual comparison of the last three years, and last month, home sales fell 3.2% to a seasonally adjusted annual rate of 5.38 million units. If this rate persists for the year, home sales will be lower in 2018 than in 2017. According to the data, 57% of the homes on the market in January had a days-on-market stat greater than 30. The average days on market for all homes was 42 days, up from 40 days in December 2017.
 

Typically, the Existing Home Sales report is very steady and stable compared to the more erratic New Home Sales or housing starts reports. The YOY decline of 4.8% is the most significant decline since August of 2015.

The national median existing home price was $240,500 in January ― up 5.8% YOY. Even though sales have measurably declined, prices have continued a steady rise, with consistent performance of 5% or above for the last three years. Lawrence Yun, NAR Chief Economist, hypothesizes the cause of the increase in home prices and decrease in sales may be attributed to a lack of inventory. Reuters agrees housing supply was lacking throughout 2017.

You Can’t Do More Without Enough

Inventory overall is down 9.5% YOY, marking the lowest January inventory count (houses on market) since data was first tracked by NAR in January 1999.

REALTORS surveyed by NAR continued to comment that buyer traffic indicates high interest but lack of inventory has created substantial roadblocks to complete the sale. In a press conference, Yun encouraged builders to ramp up their efforts to boost housing starts. Likewise, he asked investors to unload properties purchased during the market downturn several years ago.

Rise of the Refi

Real estate agents are expressing the effect of rising mortgage rates on home sales, with seller sentiment contributing to the issue of low inventory. Yun suggests many sellers are reluctant to list their homes in a “high-interest rate market.” As a result, according to the Ellie Mae Origination Insights Report, refinance mortgages are up in every category month over month and accounted for 45% of all mortgage volume in January.

Nurturing the Long Lead

In the hunt for leads, real estate agents naturally come across more prospects than buyers, an atmosphere propagated by sites like Realtor.com, Mortgageadvisor.com, Trulia and Zillow. As inventory may remain tight, originators should consider leveraging their knowledge on niche loan products as a strategy to build rapport with prospective real estate agents, home buyers and homeowners who may be candidates for refinancing. Products such as the cash-out refinance, self-employed non-prime, and non-qualified mortgage (QM) VA loan programs and renovation loans (including the FHA 203K and Fannie Mae Homestyle products) can offer a platform to help boost your presence to prospects.

Reimagine your win and redefine your value proposition to your current and future clients. Many of tomorrow’s sales may be long leads that require extra engagement in this current housing and economic environment. Harness the power of the nurturing process by positioning yourself as an information resource promoting more than interest rates.

1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series.

__________________________________________________________________________________________________________

Sources:

https://www.nar.realtor/existing-home-sales

https://www.nar.realtor/newsroom/existing-home-sales-slip-32-percent-in-january

https://static.elliemae.com/pdf/origination-insight-reports/Ellie_Mae_OIR_JANUARY2018.pdf

https://www.reuters.com/article/us-usa-economy-housing/u-s-home-sales-fall-as-record-low-inventory-boosts-prices-idUSKBN1FD24Q

About the Author

Raymond Bartreau

Raymond Bartreau is the Senior Vice President of Lending Partnerships at Digital Media Solutions, LLC (DMS), an industry leader in the world of customer acquisition and retention that helps clients maximize their digital marketing to beat the competition and accelerate growth. In this role, Raymond heads DMS subsidiary Best Rate Referrals, an award-winning consumer finance marketing firm with NMLS operating licenses in most states. In 2018, Best Rate Referrals expanded into the world of personal finance with the launch of Loan Advisor, a new online marketplace designed to provide consumers with simple and fast personal loan quotes from lenders for free. A leader with more than a decade of combined financial services and direct marketing experience, Raymond has spent his career providing lenders with the strategies and insights to better connect with consumers amid an ever changing rate-driven market. Raymond was instrumental in building one of fastest growing online mortgage marketplaces, www.MortgageAdvisor.com, which now generates demand from thousands of consumers monthly looking for purchase, refinance and home equity loans. A 2017 recipient of the HousingWire Insiders Award, Raymond also made the “National Mortgage Professional” magazine list of the top 40 under 40 in 2012, 2015 and 2016. He also was a Mortgage Professional Association “Hot 100” in 2014 and 2018.

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