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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.