Sales of existing homes unexpectedly increased in May as home buyers responded to home price declines according to the National Association of Realtors last Thursday.

The number of existing homes and condominiums sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April.

But sales remain 15.9% below the 5.93 million-unit sold in May 2007, the report showed.

Thursday's report marks only the second time in 10 months that sales have increased.

The existing homes available for sale decreased at the end of May by 1.4% to 4.49 million existing homes. With this the inventory of existing homes available for sale decreased to a 10.8-month supply at the end of May from an 11.2-month supply in April, according to the report.

The large supply of homes on the market favors buyers and will take several more months to draw the inventory down.

"Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," Lawrence Yun, the NAR’s chief economist said.
 
 
 

Freddie Mac's Primary Mortgage Market Survey (PMMS) showed that the 30-year fixed-rate mortgage (FRM) averaged 6.45 percent for week ending June 26, 2008, up from last week when it averaged 6.42 percent. Last year at this time, the 30-year FRM averaged 6.67 percent. The last time the 30-year FRM was higher was the week ending September 6, 2007, when it averaged 6.46 percent.

The 15-year FRM this week averaged 6.04 percent, up from last week when it averaged 6.02 percent. A year earlier, the 15-year FRM averaged 6.34 percent. The last time the 15-year FRM was higher was the week ending October 18, 2007, when it averaged 6.08 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.99 percent this week,  up from last week when it averaged 5.89 percent. Same period last yearthe 5-year ARM averaged 6.30 percent. This is the highest the 5-year ARM has been since the week ending October 25, 2007, when it averaged 6.03 percent.

One-year Treasury-indexed ARMs averaged 5.27 percent this week, up from last week when it was 5.19 percent. A year ago, the 1-year ARM averaged 5.65 percent. The last time the one-year ARM was higher was the week ending May 8, 2008, when it averaged 5.29 percent.

"Fixed-rate mortgage rates held relatively stable this week leading up to the June 24-25 Federal Reserve (Fed) Policy Committee meeting," said Frank Nothaft, Freddie Mac vice president and chief economist. "ARM rates, which are typically tied to short-term instruments, rose slightly due to market uncertainty over how the Fed might respond.

"This week's release of the April S&P-Case Shiller® house price indexes offered a few surprises. The decline in the 20-city composite index was less than that in March and eight cities had positive monthly growth in April – compared to only two cities in March. In addition, May's new home median sales price increased from the prior month, according the Commerce Department. It should be noted, however, that seasonality may have played a factor in these results."
 
 
 

Prices and sales of new homes dropped again in May, the government reported Wednesday. In the latest report of the, the Commerce Department sales of newly built, single-family homes fell 2.5 percent in May to a seasonally adjusted annual rate of 512,000 units. This just countered the gain in April.

The report on new home activity in May followed reports Tuesday that showed record home price drops in April, indicating the nation’s housing slump is not only deepening but also widening to include previously untouched parts of the country.

New homes were sold at a seasonally adjusted annual rate of 512,000 units in May, down 2.5 percent from the April level and 40 percent from last year's. The median price of a new home sold last month fell to $231,000, down 5.7 percent from last month. The figure was down 26 percent from a year ago, when the median price of a new home was $311,300.

The department's report indicated that the inventory of new homes for sale fell 1.7 percent in May to 453,000 units, which is a 10.9-month supply at the current sales pace.

Regionally, in May, new home sales were down in the West by 11.6 percent, 7.9 percent in the Northeast and 11.6 percent in the West. Sales gained 5.1 percent in the Midwest and rose a marginal 0.4 percent in the South.

The inventory of unsold homes increased to 10.9 months in May thus taking a much longer time to exhaust the current supply of unsold homes. Because of the unusually high inventories, economists believe that home prices are likely to continue to fall until the spring of 2009.
 

Home prices posted record drop of 15.3% in April over the same month last year in the S&P/Case-Shiller 20-city Home Price Index released last Tuesday.

The narrower 10-city index was down 16.3% year-over-year and 1.6% for the month. It was the biggest decline in more than two decades.

The S&P/Case-Shiller 20-city index is based on data going back 19 years, while the 10-city index is 21 years old.

Meanwhile, a report from the Office of Federal Housing Enterprise Oversight said U.S. home prices fell 4.6 percent in April from the same month last year, when the index peaked. That marked the biggest decline ever in the agency’s monthly index which dates back to January 1991.

The S/P Case-Shiller index tracks the sale prices of the same homes over the years while OFHEO's index only tracks sales of homes with mortgages insured by Freddie Mac and Fannie Mae. These loans were for $417,000 or less, until Fannie and Freddie's loan limits were raised in early March.

While the government report has shown nationwide price declines, the Case-Shiller index has shown bigger declines as it focuses on larger cities where prices upsurge was bigger during the boom years.

Every city surveyed posted year-over-year price drops, the month-to-month pace of declines did slow in many cities but eight metro areas actually posted gains from March to April.

The report also showed prices in eight metro areas increased in April from March. Like Cleveland posted the biggest increase in prices by 2.9%. Charlotte, N.C. and Dallas posted gains for the second straight month with 0.2% and 1.1% in April respectively.

Freddie Mac's Primary Mortgage Market Survey® (PMMS®) which was released today showed that the 30-year fixed-rate mortgage (FRM) averaged 6.42 percent for the week ending June 19, 2008, up from last week when it averaged 6.32 percent. A year ago, the 30-year FRM averaged 6.69 percent. The last time the 30-year FRM was this high was the week ending September 27, 2007, when it averaged 6.42 percent.

The 15-year FRM this week averaged 6.02 percent, up from last week when it averaged 5.93 percent. At this time last year, the 15-year FRM averaged 6.37 percent. The last time the 15-year FRM was higher was the week ending October 18, 2007, when it averaged 6.08 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.89 percent this week, up from last week when it averaged 5.70 percent. A year ago, the 5-year ARM averaged 6.31 percent. This is the highest the 5-year ARM has been since the week ending December 27, 2007, when it averaged 5.90 percent.

One-year Treasury-indexed ARMs averaged 5.19 percent this week, up from last week when it was 5.09 percent. Last year, the 1-year ARM averaged 5.66 percent.

"Fixed-rate mortgage rates continued to climb this week to the highest point in nearly nine months following the release of May's consumer and producer price indexes, both of which showed stronger levels of inflation," said Frank Nothaft, Freddie Mac vice president and chief economist. "Additionally, consumer prices rose 0.6 percent last month, the most since November 2007, and traders began to fully price in a Federal Reserve rate hike by the end of September, based on the federal funds futures market.

"Meanwhile, the housing market still struggles. New construction of single family (1-unit) homes fell in May to the weakest pace since January 1991 and April's starts had a downward revision." 

source: FreddieMac's Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com