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News : US Economy Last Updated: May 31, 2011 - 5:42 PM


US has 14.3m vacant year-round homes and home ownership has dropped to 1998 levels
By Finfacts Team
May 31, 2011 - 6:09 AM

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The US has 14.3m vacant year-round homes according to data from the Census Bureau, for the end of the first quarter. That is 11% of the housing stock and as the housing sector continues to be a drag on the economy, the percentage of homeowners dropped to 66.4%, from a peak of 69.2% in 2004. The ownership rate is now back to the level of 1998, and may go lower.

The number of vacancy year-round total has risen 3m since the crash and it's estimated that it could take more than than 13 years to return to normal levels, because of the low rate at which Americans have been starting new households and assuming construction of new homes remains at April’s low annualised level of only 551,000.

The New York Times says today that disenchantment with real estate is bound to swell further today when the most widely watched housing index is all but guaranteed to show that prices of existing homes sank in March below the lows reached two years ago  - - until now the bottom of the housing crash. In February, the Standard & Poor’s/Case-Shiller index of 20 large metro areas slumped for the seventh month in a row.

Pending home sales fell in April with regional variations following increases in February and March, with unusual weather and economic softness adding to ongoing problems that are hobbling a recovery, according to the National Association of Realtors (NAR).

The Pending Home Sales Index, a forward-looking indicator based on contract signings with completion expected within 2 months of signing, dropped 11.6% to 81.9 in April from a downwardly revised 92.6 in March. The index is 26.5% below a cyclical peak of 111.5 in April 2010 when buyers were rushing to beat the contract deadline for the home buyer tax credit.

The NAR said that existing-home sales slipped in April, although the market has managed six gains in the past nine months. Sales eased 0.8% to a seasonally adjusted annual rate of 5.05m in April from a downwardly revised 5.09m in March, and are 12.9% below a 5.80m pace in April 2010

All-cash transactions stood at 31% in April, down from a record level of 35% in March; they were 26% in March 2010; investors account for the bulk of cash purchases.

'Distressed homes' - - typically foreclosure/bank sales and sold at a discount of about 20% – accounted for 37% of sales in April, down from 40% in March; they were 33% in April 2010.

The median (mid-point with 50% of houses below this point and 50% more expensive) existing single-family home price was $163,200 in April, which is 5.4% below a year ago. Total housing inventory at the end of April increased 9.9% to 3.87m existing homes available for sale, which represents a 9.2-month supply at the current sales pace, up from an 8.3-month supply in March.

The median sales price of new houses sold in April 2011 was $217,900; the average sales price was $268,900. The seasonally adjusted estimate of new houses for sale at the end of April was 175,000. This represents a supply of 6.5 months at the current sales rate.

In the commercial property sector, from the second quarter of this year to the second quarter of 2012, NAR forecasts vacancy rates to decline 1.0 percentage point in the office sector, 0.9 point in industrial real estate, 0.5 point in the retail sector and 1.1 percentage points in the multifamily rental market.

The Society of Industrial and Office Realtors, in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 360 local market experts,1 shows a firming up of market fundamentals.

The SIOR index, measuring the impact of 10 variables, rose 6.8 percentage points to 57.5 in the first quarter, the highest since the fall of 2008. The Northeast and South drove improvements in market conditions. Vacancy rates are improving, but concessions continue to make it a tenant’s market.

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© Copyright 2011 by Finfacts.com

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