Chicago, IL (PRWEB) March 26, 2014
According to the National Association of Realtors on March 20, existing-home sales dropped to their lowest level in 19 months in February as a result of brutally cold temperatures in several regions across the country. The Federal Savings Bank, a veteran owned lender based in Chicago, knows very well the how the harsh winter weather has had a negative impact on Midwest real estate.
Existing-home sales include single-family homes, townhomes, condominiums and co-ops. Sales dropped 0.4 percent in February from January, reaching an annual rate of 4.60 million. The annual rate in January was 4.62 million. February transactions were 7.1 percent below the 4.95 million unit pace from the same month a year ago.
"We had ongoing unusual weather disruptions across much of the country last month, with the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago," said Lawrence Yun, NAR chief economist. "Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year."
Despite fewer sales, the number of days non-distressed homes stood on the market dropped to an average of 62 in February, down from January's average of 67 days and well below the average of 75 days in February 2013. The Federal Savings Bank was delighted to see this statistic fall as it proves that demand still exists if properties are listed.
Prices continue to climb
While sales declined to the slowest pace since July 2012, prices continued to grow nationwide. For all types of existing homes, the median price reached $189,000, a 9.1 percent rise from the same time last year. Rising home prices have significantly helped the housing market recovery, prompted more homeowners to list their home for sale and bring relief to low levels of inventory.
"Price gains have translated into an additional $4 trillion of housing wealth recovery over the past three years," Yun added.
Compared to a year ago, the number of distressed homes sold - short sales and foreclosures - dropped from 25 percent of all transactions to 16 percent in February 2014. Distressed home sales were 15 percent of all sales in January. Of the distressed sales, 11 percent were foreclosed homes and 5 percent were short sales. Nationwide, foreclosures have dropped significantly as a result of higher home prices, more homeowners regaining equity, a decline in unemployment and mortgage refinance programs.
Since prices have risen, the inventory of available existing homes on the market rose 6.4 percent to 2 million units, which represents a 5.2 month supply.
While sales are down, the trend is likely not due to mortgage rates, which have held steady throughout the beginning of the year. However, The Federal Savings Bank also emphasizes that cold weather has played a significant role in the Midwest.
Interest rates for short-term home loans also declined, reaching an average of 3.32 percent, down from the previous week's average of 3.38 percent.
Contact the Federal Savings Bank, a veteran owned bank, to explore affordable mortgage options.