Contract Cancellations A Factor in Home Sales Drop

Hi Folks,

   I'm honored to have you here with me today and always.

   This past week, the National Association of Realtors®, or NAR, released their June figures for Existing-Home Sales, which showed a decrease.

Let's take a quick look at the breakdown and then we'll discuss the factors involved:
  * From June 2010 - June 2011:
       The Northeast dropped 17% and the Midwest dropped 14%
  * Single-family home sales were stable, but the condo sector weakened.

Some other important details, per the NAR:
  * First-time buyers purchased 31 percent of homes in June (At 36% in May, and 43% in June 2010).
  * Investors accounted for 19 percent of purchase activity in June (Unchanged from May, and 13% in June 2010).

   Prices were up slightly, but Lawrence Yun, NAR chief economist, called it an "uneven recovery". NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., went further, and added that home sales should be higher, saying, "With record high housing affordability conditions thus far in 2011, we’d normally expect to see stronger home sales”.

   What was a major factor?

   The NAR Press Release said that "Contract cancellations spiked unexpectedly", and according to Victor Benoun, President of The Mortgage Source, Inc., cancellations were up 16%., which is a "telling number".

Benoun explained that there are several factors for the spike in cancellations:
  * First, says Benoun, to some extent, "buyers remorse may set in"
     He says this could be related to costly repairs discovered during an inspection.
  * Another factor is financing.
     Benoun says that lenders have made borrowing more difficult
  * Benoun also points to Appraisals.
     He says "If the value comes in lower than sales price", it is another cause.
  * Finally, he points to employment (losing a job while applying for a home loan)

   However, as with all Economic numbers, they vary by location.

   "The national numbers show how local real estate truly is.", says Ken Anderson, President and Broker of Coldwell Banker Evergreen Olympic Realty. Anderson says that they are, "not seeing the higher cancellation rates reported in other parts of the country", and that buyers "are cancelling far fewer contracts than a year ago, when the stimulus created too much urgency".

   In spite of the market, there is hope. Anderson says, "Our home sales increased 11% from May to June. Buyers are recognizing the opportunities and are getting back into the market.". Benoun says that there is a "silver lining for those who have the desire and ability to purchase a home.", and adds that prices "have not been this low in a decade and mortgage rates are hovering at 30 year lows.

   Where do you think the market is headed? Since the jump in cancellations was unexpected, what other factors might also happen unexpectedly?


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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #ContractCancellations #HomeSales #ExistingHomeSales #NAR #recovery #housing