by Annette DeCicco | Jul 31, 2024 | Industry, News Feed
WASHINGTON (July 31, 2024) – Pending home sales in June ascended 4.8%, according to the National Association of REALTORS®. All four U.S. regions posted monthly gains in transactions. Year-over-year, the Northeast, Midwest and South registered declines, while the West increased.
The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – grew to 74.3 in June. Year over year, pending transactions were down 2.6%. An index of 100 is equal to the level of contract activity in 2001.
“The rise in housing inventory is beginning to lead to more contract signings,” said NAR Chief Economist Lawrence Yun. “Multiple offers are less intense, and buyers are in a more favorable position.”
Pending Home Sales Regional Breakdown
The Northeast PHSI ascended 3.0% from last month to 65.5, a decline of 0.3% from June 2023. The Midwest index rose 4.7% to 73.7 in June, down 4.2% from one year ago.
The South PHSI increased 6.3% to 89.3 in June, dropping 3.9% from the prior year. The West index climbed 3.4% in June to 58.4, up 1.0% from June 2023.
“Even more inventory is expected to come onto the housing market in the upcoming months ahead of the normal, seasonal declines in the winter,” added Yun. “The Northeast’s small gain in contract signings is due to the ongoing housing shortage situation in that region, leading to stronger home price gains. It is a good time to list.”
About the National Association of REALTORS®
The National Association of REALTORS® is America’s largest trade association, representing 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues.
The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
NOTE: Existing-Home Sales for July will be released August 22. The next Pending Home Sales Index will be released August 22. All release times are 10 a.m. Eastern. View the NAR Statistical News Release Schedule.
by Christian Ashley Harris | Jul 30, 2024 | Industry, News Feed
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National Association of Realtors President Kevin Sears stepped on stage at the Aria Resort & Casino in Las Vegas Tuesday, looked out at the crowd of spectators — many of them NAR members — and sent a message of resilience in the face of industry-derailing commission lawsuits and scandals from within.
“I hope — at the end of the day, at the end of the two-year term — to be able to look back and say there was some stability and calm brought back into our organization and our industry,” Sears told a crowd of hundreds of onlookers in his first public appearance at an Inman Connect event.
His message to ICLV attendees came in response to a direct question about the very nature of his job at NAR, raised by moderator Clelia Warburg Peters, a managing partner with ERA Ventures, during a session entitled, “Okay, Seriously: What Now?”
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Sears’ aim was to offer transparency to members in the audience and share his accomplishments since being named president of the 1.5 million-member organization six months earlier. And he had to do it in front of an audience with strong or mixed opinions about how beneficial NAR has been for dues-paying members.
The tension was on display when Peters asked Sears to explain his job requirements.
“I’m asking that in part because I think a lot of people feel you haven’t done the job,” Peters said, prompting cheers and modest applause from the audience 2 minutes into the on-stage interview.
“The job is to be the voice for real estate,” Sears said in answer to Peters’ question. “I’ve been getting on the road and having conversations with members. God willing, I’ll be president for two years.”
“It’s been very tumultuous over the last 12 to 18 months,” he added.
Sears took the reins at the organization in surprise fashion in January after the abrupt and mysterious resignation of Tracy Kasper. Kasper had been in the top job of the nation’s largest trade organization for just four months when she resigned under threat of blackmail.
Sears was the third NAR president in a four-month span, as Kasper had assumed the office early following the resignation of former president Kenny Parcell.
During his tenure, Sears and members of leadership at NAR brokered an agreement to settle a wave of litigation that targeted the status quo of how Realtors get paid.
NAR must pay $418 million and the industry must make sweeping changes to settle the cases. In exchange, the group covered about 1 million of its members from liability in the existing and future lawsuits and provided a pathway for other brokerages and members to settle, as well.
It’s still not clear how NAR will pay the settlement, and Sears said there would be pain ahead for the organization. (“What I said to staff is, unfortunately this is going to hurt everyone, but we can’t cripple anyone,” Sears said.)
And that’s not the only force posing a threat to the organization, Realtors and the industry broadly.
The Department of Justice has been sending signals around the type of marketplace it wants to see moving forward. It has continued to push to reopen investigations into NAR policies.
Sears pointed out that Assistant Attorney General Jonathan Kanter specifically asked to meet with him and other members of NAR leadership.
That’s when he began to earn applause lines of his own.
He said NAR will remain focused on its efforts around advocacy and education on behalf of the real estate industry. He took sole credit for the Department of Veterans Affairs changing its long-standing rule blocking veteran buyers from paying any compensation to a broker. (“Do not let somebody else, some other group, try to take credit for this,” Sears said. “This was done solely by the National Association of Realtors.”)
“I can tell you we are very, very effective in our advocacy,” Sears said. “
Sears took issue with statements by DOJ attorneys who want commissions to be “decoupled,” or completely separated between the seller and the buyer.
“But it’s expressly allowed by law in over 40 states. If they don’t like it they should do the hard work of going to state legislatures and change the law,” Sears said to applause from members in the room.
“Commissions have always been negotiable,” Sears said. “We’re going to continue to have the conversations with buyers and sellers about how we’re going to get compensated. We need to educate, especially the seller and consumer.”
Work with the DOJ will continue, and Sears said Realtors need to stay focused on the value and benefits they provide to consumers. That, he said, was the “common ground” that NAR and the DOJ have broadly agreed on.
“Their vision of what is good for the consumer might be a little different than ours, but so long as our focus is on the consumer, that’s going to be a helpful defense with the Department of Justice,” Sears said.
He sent a warning to any agents or brokerages that might find ways to operate in ways that aren’t in line with the settlement agreement, possibly referencing a wave of new startups that are offering brokers ways to market offers of compensation.
“Don’t get cute,” he said. “Don’t try and do an end-around when it comes to commissions, offers of compensation, that sort of stuff. Look at the letter of the settlement and the spirit of the settlement. Be consumer-centric and that will be your ultimate defense.”
“Unfortunately, I think the Department of Justice is going to be looking very closely,” Sears said. “I don’t want to see any of my members and any of my brokerages get caught in their crosshairs.”
The crowd gave Sears two more rounds of applause during his appearance, including once when Peters thanked him for getting on stage at Inman Connect and facing hundreds of members after a rough patch for the organization.
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by Lauren Fox | Jul 30, 2024 | Industry, News Feed
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Nile Lundgren
How can agents show off their unique value proposition? One way is by bringing a scale model of the development they’re representing everywhere they go, Nile Lundgren of SERHANT. showed Inman Connect Las Vegas attendees on Tuesday.
During a panel that included moderator Katie Kossev of Side and luxury agents Michelle Griffith of Douglas Elliman and Ben Belack of The Agency, Lundgren toted to the stage a model of the Mercedes Benz Places in Miami, a 791-unit development that SERHANT. is currently representing.
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“This is how you stand out from the crowd,” Lundgren said. “Because when we make bids for pitches, we make bold statements.”
Of course, every agent is different, and such “bold” tactics for differentiation won’t work for everyone. Griffith, for instance, said that she instead prefers to focus on her own calling cards, which include her social media, company profile and website. She constantly reevaluates these assets to ensure they’re making a current and accurate reflection of her business.
“I want to make sure that’s always up to date and projecting my brand,” Griffith said.
For his part, Belack thought it important that an agent be able to intelligently and succinctly articulate their value proposition to a potential client.
Ben Belack | The Agency
“I pretty much say the same thing, which is, the job of the real estate agent has changed,” Belack said. “We’ve had to become master marketers and master advertisers … It is my job to emotionally captivate buyers at first contact.” He explained that because buyers are so captivated by swiping for homes on Trulia and Zillow today “at the same cadence” that they’re swiping for potential partners on dating apps, it’s important that agents be able to grab their attention.
One way he does that is by showing potential clients how many views his marketing videos receive on social media, which is more effective than just saying something general about how good his or his firm’s marketing is.
Lundgren added that to stand out among the 80,000-plus agents he’s competing against in Manhattan, he makes those “bold moves” like jumping into a pool with a suit on during a marketing video. But he has also worked hard to develop consistency in his marketing over time and has worked to simplify his communication so that it’s easily understood by potential clients.
“At the end of the day, sales is nothing more than a transfer of excitement,” he added.
Michelle Griffith | Douglas Elliman
Griffith added that authenticity is also an important part of the equation.
“I’m loving all of this and how they stand out,” she said. “So much of this is what’s authentic to Nile, what’s authentic to Ben, and what’s authentic to myself.”
In addition to customizing her marketing, Griffith said that listening is another big component of her value proposition.
“A big point is listening,” she said. “Sometimes we go into these pitches and want to show everything we can do, and that’s great. But we have to be listening.”
It’s also good for agents to realize that they don’t have to be the agent that appeals to all people.
“I know I’m not for everyone and I’m OK with that,” Belack said. “I think if I were advertising to everyone, I would have no one.”
Lundgren agreed, saying, “I think you have to understand who you are. It’s very important for everyone in this room to determine what it is exactly that you’re good at. When I started in the business, I didn’t know anything. But I did know one thing: I was in the city that never sleeps, and I would be the broker that never sleeps.”
Katie Kossev | Side
At that point in the discussion, Lundgren paused, marveling at the smoke in the room, which it turned out, was just part of the staging and special effects.
“There’s a lot of smoke here,” Lundgren mused, wanting to be sure nothing had caught fire.
“I was like, ‘Am I high?’” Belack admitted to thinking.
“No, you’re not high, Ben. It’s just Vegas,” Kossev said.
Returning to the topic of discussion, Griffith noted that a great way for newer agents to get in front of clients is to just start with a small focus area that can be refined.
“[With] a lot of the new agents I’m mentoring, I say, start in your neighborhood, where you’re comfortable,” Griffith said. “What is your wheelhouse?
“You can become an ambassador of this one small area, and your passion [will] translate,” she added.
Belack added that agents really need to put in the work to succeed, which means aiming for a diversified lead flow and making it happen by scheduling dedicated time to make calls every day.
“You’ve got to spend an hour a day prospecting, you’ve got to spend one hour following up, and you’ve got to spend one hour talking to your SOI,” on a daily basis, Belack said.
“I’m human, though,” Belack added. “I don’t always hit my numbers … But because there’s a plan in place, internally, when it’s 4 o’clock every day, I’m like, I’m going to pick up the phone.”
In closing, Lundgren showed off his model one more time, while encouraging agents to be authentic, be good listeners and keep consistent.
“Be authentic to who you are,” Lundgren said. “Lean into that, clearly communicate it, be an active listener and the sky’s the limit.
“If we’re able to stay consistent over the long term, eventually you’ll get that 1-million-view listing video,” he added.
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by Jessica Souza | Jul 30, 2024 | Industry, News Feed
With the help of a firm employing more than 100 undercover researchers, the real estate tech strategist tested agents at roughly 30 brokerages. They found that more than 1 in 3 inquiries never received a response from the agent.
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A nationwide “secret shopper” operation of undercover researchers found that nearly half of potential leads from online forms and open houses were slipping through agents’ fingers due to low human response rates and inconsistent followup efforts.
Real estate tech strategist Mike DelPrete — who conducted the study with the help of a firm that specializes in these “secret shopper” efforts — revealed on Tuesday that 47 percent of inquiries made through the online form on agent websites never received a human response, and 42 percent of open-house attendees were never asked for contact information by the listing agent.
Sometimes the researcher posing as a client did receive a response, but it was automated. After accounting for these, more than 1 in 3 online form inquiries never received any kind of response at all from the agent they reached out to, DelPrete said.
“Now, in a period of time when everybody’s worried about justifying their commission, what if I showed this to the homeowner that the agent was representing?” DelPrete asked an audience of real estate professionals at the Inman Connect conference in Las Vegas. “That would, in effect, be like the agent saying to the homeowner, who they’re paying to sell their home, ’42 percent of the time, I’m not going to do my job.’”
And it got worse from there, DelPrete said.
“When the contact information was given, still there wasn’t a followup,” DelPrete said. “At the end of the day, 62 percent of shoppers had no follow-up.”
Even the agents who did respond to potential client inquiries were slow on the draw, DelPrete said. The typical response came more than eight hours after the secret shopper reached out to the agent on average.
The study employed more than 100 secret shoppers and reached out to agents at 30 brokerages. DelPrete’s biggest takeaway? Consumers received remarkably inconsistent treatment, he said. Some agents were great about responding promptly and providing helpful service. Others ignored requests for information altogether — to the potential detriment to their business.
DelPrete argued that agents spend too much time worrying about things outside their control — such as changes to commission practices or the effect of higher interest rates on home sales — and ignoring things within their control that could have a meaningful impact on their businesses.
“If someone calls, call them back,” DelPrete told conference attendees. “No. 2, if somebody texts or emails you, write them back. And third, build a meaningful relationship.”
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by Latham Jenkins | Jul 30, 2024 | Industry, News Feed
Andy Florance suggested rival portals are more interested in selling leads than houses and called a lawsuit against his company a “PR stunt.”
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Perennial portal warrior Andy Florance, who leads Homes.com parent CoStar, said Tuesday that his company’s differentiator is an interest in getting homes sold — and added later that a high-profile lawsuit against his firm is a “PR stunt.”
The comments came during Florance’s appearance on the main stage of Inman Connect Las Vegas — a platform that Florance has used multiple times in the past to call out rival portals such as Zillow and Realtor.com. Florance’s comments this time were less explicitly pugnacious, but in response to questioning from moderator Brad Inman, he did say that “what we’re focused on is selling the house.”
Florance drew a contrast between that approach and other portals, which he said are focused on selling leads, not homes. He compared the situation to old classified ads in newspapers, arguing that companies such as Zillow made every “ad” — in this case, a home listing — the same size, and then included a phone number for an agent who doesn’t hold the listing itself.
Homes.com, on the other hand, can put agents’ listings “front and center” and give agents tools “so they could demonstrate to the seller that they’re adding more value,” Florance said. He added that agents who use Homes.com “are getting 50 percent more listings,” which translates to “about $100,000 a year.”
The comments were a reference to CoStar’s “your listing, your lead” strategy, which aims to funnel consumers to the agents who hold listings, rather than agents who pay a portal for lead generation.
Brad Inman, left, and Andy Florance at Inman Connect Las Vegas on Tuesday. Credit: AJ Canaria Creative Services
Florance also weighed in during the session on a legal battle between his company and Realtor.com parent Move, Inc. The battle began earlier this month when Move sued CoStar for theft of trade secrets. At issue is an editor who previously worked for Realtor.com but later took a job at CoStar. That editor, James Kaminsky, spoke out just days ago to say he is innocent.
While on stage, Florance described Kaminsky as a “poor guy” with two special needs kids, who didn’t have a non-compete and is not running Homes.com.
“I frankly think it’s just a PR stunt,” Florance said of the lawsuit. “We have paid for his counsel, and we have put him on leave indefinitely. We’re not going to let him be the fall guy for this.”
At another point in the session, Florance also discussed CoStar’s recent marketing campaign, which has involved paying for ads during high-profile events such as the Super Bowl and the Olympics. The ads are designed to raise the profile of Homes.com, though Florance’s rivals have expressed skepticism of the campaign’s efficacy. Florance, however, pushed back Tuesday, saying that the ads have increased consumers’ unaided awareness of the brand and that they have resulted in billions of impressions.
Florance ultimately concluded his remarks by offering advice to entrepreneurs in the audience, suggesting that the key to success is perseverance.
“The folks who stick with it beyond a certain point,” he said, “just begin to learn how to surf.”
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by Leah Curtis | Jul 30, 2024 | Industry, News Feed
FHA premium cuts spur growth, but borrowers with stellar credit can still do better taking out conventional Fannie Mae- or Freddie Mac-eligible mortgages with private mortgage insurance.
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Although they helped nearly 800,000 Americans buy a home in 2023, private mortgage insurers lost market share to FHA and VA programs last year — a trend that continued into the first quarter of 2024.
In the wake of the 2007-09 housing crash and Great Recession, FHA or VA loans were often the best bet for many homebuyers who hadn’t saved up much for a down payment.
But private mortgage insurers — who provide a backup to lenders that’s required by Fannie Mae and Freddie Mac when homebuyers put less than 20 percent down — have been working to claw back market share for a decade.
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For a time, increased FHA premiums made private mortgage insurance the cheaper option for many borrowers. Programs from Fannie Mae and Freddie Mac that allow low-income homebuyers to buy homes with as little as 3 percent down have also helped private mortgage insurers attract more first-time homebuyers.
First-time homebuyers accounted for close to two-thirds (64 percent) of the loans backed by private mortgage insurance in 2023, up from 61 percent in 2022, according to a report released Tuesday by U.S. Mortgage Insurers (USMI).
Close to one in five borrowers (18 percent) who depended on private mortgage insurance to get approved last year made only a 3 percent down payment, up from 11 percent in 2020, the report said.
Seth Appleton
“Without private mortgage insurance, far too many buyers would remain on the sidelines instead of building intergenerational wealth and working towards the American Dream of homeownership,” said USMI President Seth Appleton in a statement.
(USMI is an industry association representing five of the six active U.S. mortgage insurers — Enact, Essent, MGIC, National MI, and Radian.)
After insuring $283 billion in new mortgage originations last year, private mortgage insurers were standing behind close to $1.6 trillion in home loans — including $1.4 trillion in mortgages guaranteed by Fannie Mae and Freddie Mac.
FHA and VA take back market share
Losses on claims in the wake of the 2007-2009 Great Recession made it difficult for private mortgage insurers to write new policies.
However, after seeing their share of the market for insured mortgages drop below 20 percent in 2009 and 2010, private mortgage insurers gradually reclaimed some of their business from FHA and VA loan programs.
From 2008 to 2013, annual premiums on FHA loans rose from 50 basis points to 135 basis points as the Obama administration coped with losses that led to a $1.69 billion bailout of FHA Mutual Mortgage Insurance Fund in 2013.
Private mortgage insurers steadily grew their share of the mortgage insurance market back to nearly 50 percent in 2022.
But as the economy improved and the FHA program recovered, the Obama administration was able to cut annual FHA premiums by 50 basis points in 2015. Another 30 basis point cut announced by the Biden administration last year made FHA mortgages more attractive than Fannie and Freddie mortgages “for most borrowers putting down less than 5 percent,” according to analysts at the Urban Institute.
During the first quarter of 2024, private mortgage insurers saw their market share drop to 40.1 percent of insured mortgages, down from 47.3 percent in Q1 2023, according to data compiled by Inside Mortgage Finance and the Urban Institute.
Of the $145 billion in mortgages originated with some kind of insurance during Q1 2024, private mortgage insurers still backed the biggest chunk of loans, totaling $58.2 billion.
But FHA’s share of the market grew from 29.9 percent in Q1 2023 — before annual premiums were slashed by $678 million a year — to 36.4 percent in Q1 2024.
Analysts at the Urban Institute calculate that borrowers with a FICO score of less than 740 will find FHA financing to be a better deal when putting 3.5 percent down.
But borrowers with FICO scores of 740 and above will do better taking out a conventional Fannie- or Freddie-eligible mortgage with private mortgage insurance.
Those calculations reflect not only last year’s reduction in FHA premiums but changes to upfront fees that lenders pay when selling mortgages to Fannie and Freddie that were designed to help low- and moderate-income borrowers, the Urban Institute said.
One remaining drawback of FHA loans for borrowers making down payments of less than 10 percent is that the only way to get out of paying mortgage insurance premiums is to refinance out of their FHA mortgages or sell their homes.
Mortgage trade groups have urged the Department of Housing and Urban Development to ditch the “life of loan” premium payment requirement, but so far HUD remains intent on rebuilding FHA’s Mutual Mortgage Insurance fund for the next downturn.
Having slashed annual FHA mortgage insurance premiums by 35 percent last year — and with 2024 FHA loan limits rising to a minimum of $498,257 in affordable markets and up to $1.72 million in high-cost states like Alaska and Hawaii — total insurance in force is growing faster than reserves.
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