Home Purchases Up, but Earlier Sales Look Weaker

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Home purchases up, but earlier sales look weakerWASHINGTON (AP) - The number of Americans who bought previously occupied homes rose last month. But the National Association of Realtors says it overstated about 3.5 million sales during and after the Great Recession, showing the housing market remains much weaker than previously thought.

The private trade group says sales rose 4 percent last month to a seasonally adjusted annual rate of 4.42 million. That's below the roughly 6 million sales a year that economists say are consistent with a healthy housing market. But it's ahead of 2008's revised sales, now considered the worst in 13 years.

The nearly 4.2 million homes sold last year are far fewer than the nearly 7.1 million sold at the peak of the housing boom in 2005. This year is on pace to slightly exceed last year's total of about 4.25 million.

The trade group revised down its sales from 2007 through October more than 14 percent, from 24.8 million to nearly 21.3 million. Among the reasons for the lower figures, the Realtors group says: changes in the way the Census Bureau collects data, population shifts and some sales being counted twice.

The sharp revisions could cast doubt on future sales numbers from the Realtors' group, a private trade organization that lobbies on behalf of its 1.2 million members.

John Ryding, an economist at RDQ Economics, called the revisions "massive" and cited them as an example of how economic data can be unreliable.

The Realtors' group said it trusts its new figures, which were checked by government agencies and CoreLogic, the California-based real estate data firm that first raised questions about the numbers earlier this year.

Other economists said the lower numbers won't necessarily matter, since sales are up and fewer homes are sitting idle waiting for buyers. Sales have risen more than 12 percent over the past 12 months. The supply of unsold homes has fallen more than 18 percent.

More than two years after the recession officially ended, many people can't qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling. Sales are also being hurt by a decline in first-time buyers, who are critical to reviving the housing market.

The new figures show that sales fell in three of the past four years since the housing market began to drop in 2006. Declining prices and record-low mortgage rates haven't been enough to boost sales.

The changing numbers could affect how economists view the trade group's data. It could also affect companies that use the figures for hiring and expansion plans.

Sales are measured when buyers close on homes. But many deals are collapsing before that point. One-third of Realtors say they've had at least one contract scuttled in November and October, up from 18 percent in September.

Contracts have been canceled for any of several reasons: Banks have declined mortgage applications; home inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing.

The median sales price rose 2.1 percent to $164,200 in November.

The high rate of foreclosures has made resold homes much cheaper than new homes. The median price of a new home is roughly 30 percent higher than the price of one that's been occupied before - twice the normal markup.

Investors are taking advantage of the discounts. Their purchases made up 19 percent of all sales last month, compared with fewer than 10 percent in healthier housing markets.

Purchases among first-time buyers rose slightly last month to make up 35 percent of sales, up from 34 percent in October. In healthy markets, first-time buyers make up at least 40 percent of sales.

At the same time, homes at risk of foreclosure made up 29 percent of sales last month. That's up from 28 percent in October. Those homes made up less than 10 percent of sales in healthier periods. Investors are increasingly buying homes priced under $100,000.

Sales rose across the country in November. They increased on a seasonal basis by nearly 10 percent in the Northeast, 4.3 percent in the Midwest, 3.6 percent in the West and 2.4 percent in the South.

The glut of unsold homes declined to 2.58 million homes. At last month's sales pace, it would take seven months to clear those homes. Analysts say a healthy supply can be cleared in about six months.

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16 Comments

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rudimario

What is up with the banks now bulldozing homes. I mean these things are just a couple of years old, in the $150,000 - $300,000 range, and they are just being turned under?

December 26 2011 at 3:42 PM Report abuse rate up rate down Reply
1 reply to rudimario's comment
LL

It's all about bringing us to our kness and finally submitting to the Social Agenda that this government is is ushering in witht he hlep of the bankers that they've bailed out for this very purpose !

December 26 2011 at 4:34 PM Report abuse rate up rate down Reply
dnbrrn4

I think the Associated Press and other papers should stop printing false information. I seriously doubt that any information in this story is true- well one sentence is . " The bank makes its money on closings( closing costs) ". Isn't that also how we got into this trouble. The banks made a decision about how they can make more money. The answer was " We need to do more closings " " fix the numbers so everyone qualifies ". So they did ,but they didn't care. No worry , they took out "CREDIT DEFAULT INSURANCE " and made a fortune- - - BILLIONS. Now how is this legal ? Don't expect the government to fix it - All of them bought " CREDIT DEFAULT INSURANCE " policies to profit off of your failure. A I G and Lehman Brothers didn't have enough money to pay them off so the government bailed them out with your money so they could get paid ,and they made fortunes . How is this the homeowners fault ? How is this legal ? What can WE do about this?

December 26 2011 at 3:32 PM Report abuse rate up rate down Reply
Mike

What a joke!!! 19% of "low price" sales are to investors. Almost one quarter of all homes. Not very reassuring IMHO. Overstated by 3.5M homes (almost 15%!) "after" the Great Recession! They keep stating we in recovery, BUT WHERE!!! I don't know but a very few people who seem to believe we are in any better condition than 3-4 years ago. All numbers, all hype--much like this overblown housing information. Folks, this is pure BS!

December 26 2011 at 1:50 PM Report abuse +2 rate up rate down Reply
mike jones

AFTER 8 HELL YEARS OF BUSH AND DICK C. IT WILL BE 20 YEARS FROM NOW WHEN THE COUNTRY RECOVER

December 26 2011 at 1:48 PM Report abuse -1 rate up rate down Reply
1 reply to mike jones's comment
LL

The country will recover when enough of us finally March on Washington - NOT on New York !!!

December 26 2011 at 4:35 PM Report abuse rate up rate down Reply
duvhoc

I'm dismayed at the artical's assertion that first time buyers are key to home sales. My fear is that this belief will lead us to another "bubble" brought on by our government's feable attempt to boost home sales by pushing banks to loan to unqualified borrowers, A.K.A. " preditory lending".
If these first time under qualified buyers were indeed the key to past housing sales stats, those stats are based on a false market.
My own experience with the FHA is such a case. In 1998 I bought my only house . The broker felt that FHA was the best loan for me. They qualified me for a loan whose payments were 2/3 of my gross income. Fortunately, I refused to borrow more than what would require 1/2 of my net income.
I say fortunately because 2004 was the last year I worked a 2080 hour year. 2006 was the last time I received an hourly raise. And in 2011 I worked a whole 1060.5 hours.
It should be obvious to every one by now that the the way out of this is not found in government. It won't be fast, it won't be easy and certainly not "fair". But the market can return to a sustainable level if left to run it's cycle.
Had the fed just stayed out of the home lending game, prices would never have gone so high and unqualified borrowers would not be stuck in over priced and under valued houses.

December 26 2011 at 1:46 PM Report abuse rate up rate down Reply
trbgd

Let's face it. No one really knows. And especially Huff Puff does not know. All this crap depends on where you are living and what kind of job market you live in. Same ole Huff-crap. But I guess all tabloids have to reel you in some how.

December 26 2011 at 10:47 AM Report abuse +3 rate up rate down Reply
patdelb4

I would say this is a crock of Bull because the housing market is still in trouble and we have not seen rock bottom yet...
More jobs will be lost this year and if the job market does not pick up soon we may go into depression because people are exhausting their unemployment and having to go on welfare and the States are having to cut back on welfare benefits...
Our next stop is Depression by mid 2012...
Yes, we can thank Obama for this mess we are all in...
Kicking the can down the road doesn't work anymore nor does shovel ready when there are no jobs...
Crime will increase, just watch your local newspapers to see when and where it is hitting...
If I had a job and a house and the house was less than I owe then yes I would walk away and wait without paying anymore payments for the next year just to save my money for a nice forclosure to buy under someone else's name and payments would be a lot less than what I was paying for a house I bought that was now overpriced ...

December 26 2011 at 10:11 AM Report abuse +4 rate up rate down Reply
1 reply to patdelb4's comment
Kellie

The house was overpriced when you bought it and because people like you make stupid financial decisions all the rest of the people have to suffer for it. Walking away from a house should be considerd grand larceny if you are able to pay the payments. And all people that get into a loan and just say they cant afford it when they can should be fined at half the rate of the loan till it is paid off. That Pat would be the fair way to do it.

December 26 2011 at 10:54 AM Report abuse +2 rate up rate down Reply
1 reply to Kellie's comment
LL

REALLY ? And where did you get your Bachelor's in Economics ?....

It amazes me how those who have jobs postulate about those who do not, and were caught up in the mortgage debacles that the government initiated - and how people like you "Kellie" so much as DARE to open up your silver spoon mouth ! Yes, I know what family you come from dear.

December 26 2011 at 4:39 PM Report abuse rate up rate down
Donald G

Lets play a game - shall we? Its called Find the ghost houses. When you are out and about look at all the homes that you can. How many have no draperies, no cars in the driveway, lights not on, lawn not being maintained....etc. Congratulations- you found a ghost house - a property taken back by the lender but not yet up for sale. As you find more and more of them you will soon realize any talk of a recovery at this time is bogus. Have fun and good luck with your hunting. And try not to drink the kool-aid.

December 26 2011 at 9:17 AM Report abuse +3 rate up rate down Reply
ump495

think its bad now....just see whats going to happen over the next 12=15 months or so. hold on to your hats.

December 26 2011 at 8:13 AM Report abuse +5 rate up rate down Reply
1 reply to ump495's comment
debsully69

It's comments like yours that help slow down the recovery.If major news articles were published on a weekly basis stating that the economy was fine even if it wasnt,people would be fooled into buying and the end result would be self fulfilling.My point is,how about less negative outlook on the economy and more positive.

December 26 2011 at 12:08 PM Report abuse -2 rate up rate down Reply
groininjurybad

So the people that can afford to take advantage of the foreclosures in nice areas are doing just that. What the hell is so hard to understand about that? This housing market has not reached bottom yet, more and more people are filing for bankruptcy and walking away from underwater properties because of job loss and no way to pay . This crap isn't going to straighten out anytime soon.

December 21 2011 at 4:31 PM Report abuse +4 rate up rate down Reply