Existing-home sales increased in August
One day can make a big difference in housing industry metrics.
About 25 hours after the release of a disappointing housing starts report, the National Association of Realtors (NAR) said existing-home sales for August increased 7.7% to a seasonally adjusted annual rate of 5.03 million.
The August figure is 18.6% higher than the 4.24 million pace recorded in August 2010.
"Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” said Lawrence Yun, NAR chief economist. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”
Yun added that aberrations in housing data are possible over the coming months, as parts of the country recover from storm damage that may have disrupted closings.
NAR president Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said market affordability is a positive. But he pointed to some of the challenges to closing deals. “The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price," Phipps said.
The national median existing-home price for all housing types was $168,300 in August, which is 5.1% below August 2010. Distressed homes — foreclosures and short sales typically sold at deep discounts — accounted for 31% of sales in August, compared with 29% in July and 34% in August 2010.
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Profits drop 31% at Lennar
National home builder Lennar reported nearly flat sales for the third quarter of 2011, with revenues of $820.2 million, down 1% from the same quarter of 2010. Net income in the three months ended Aug. 31 were $20.7 million, down 31% from the $30 million earned in the third quarter a year ago.
The Miami-based home builder delivered 2,865 new homes, a decrease of 3% from the third quarter of 2010. New orders were up 11%, to 2,914 homes. The cancellation rate was 20%.
The company, which builds in 17 states, now has a backlog of 2,519 homes — up 16% from the third quarter of 2010.
Stuart Miller, Lennar’s CEO, noted that the company generated profits in all of its business segments, “despite operating in very challenging economic conditions."
Demand for home purchases is “slowly return[ing] to the marketplace, driven by low home prices and all-time low interest rates,” Miller said. “Limiting that demand is tight and tightening lending standards, high unemployment and low overall consumer confidence, which continue to weigh heavily on the purchase of new homes."
The company continues to focus on “efficient business practice” through its “Everything’s Included” program, product re-engineering and SG&A reduction, Miller said.
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Credit crunch and foreclosure rate limit builders
The National Association of Home Builders (NAHB) weighed in on the disappointing housing starts figures released Tuesday.
Nationwide housing starts declined 5% to a seasonally adjusted annual rate of 571,000 units in August.
"At this point, most builders are only looking to replenish their depleted inventories of new homes for sale, but otherwise holding off on new projects," said National Association of Home Builders (NAHB) chairman Bob Nielsen, a home builder from Reno, Nev. "While we would like to get more crews back on the job, we need to see solid improvement in consumer demand, greater access to credit for both builders and buyers, and a reduction in the number of foreclosed properties on the market before we can ramp up new production."
"Today’s numbers are completely consistent with NAHB’s forecast for the quarter, and are in keeping with the anemic economic and job growth we are seeing across most of the country," said NAHB senior economist Robert Denk. "That said, we continue to anticipate modest gains in new-home production through the end of this year with greater momentum building into 2013, and some pockets of improvement are already evident in about a dozen metros nationwide."
The decline in starts was primarily on the more volatile multi-family side, with single-family housing production edging down just 1.4%. Meanwhile, permits for new construction posted modest gains in both sectors.
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