Existing home prices in the U.S. fell on a year-over-year basis in August for the first time since 1995, according to a report Monday from the National Association of Realtors.
The slow resale market has prompted some homebuilders to help prospective buyers sell their current homes by offering a listing agent, covering a portion of the sales commissions and – in rare cases – buying the existing home.
Monday’s report helps explain why:
The median U.S. home price last month was $225,00, a 1.7 percent decline from the median value of $229,000 in August 2005.
The annualized pace of existing home sales fell 0.5 percent, while the inventory of unsold homes topped 3.9 million, enough supply to cover 7 1/2 months of sales.
According to metro-area home- sales data released earlier this month, the median price of condos and townhomes fell to $160,000, a 2.4 percent decline year-over-year. Single-family home values fell 0.8 percent to $252,900.
A national report on new-home sales Wednesday is expected to show a decline in sales, adding to the softness of the market.
“Most people have to sell their existing home in order to qualify for a new home because they can’t afford both payments,” said Bill Watson, a real estate agent with ReMax Classic in Greenwood Village.
Watson oversees a listing-assistance program used by several small and medium-sized builders in the area.
Builders are increasingly willing to offer a customer a real estate agent on their dime, provided the customer is willing to accept a price that will sell their existing home faster.
Not having to cover a 2.5 percent to 3 percent commission for a listing agent often can provide enough wiggle room to beat the competition, said Tom Ullrich, a real estate agent with ReMax Masters in Greenwood Village.
“The biggest problem we run into are people with false expectations about what their home value is,” said Ullrich, who works as a preferred-listing agent with some of the area’s larger homebuilders.
In return for making a commission on the sale of a new home, agents such as Ullrich forgo the commission on the sale of the buyer’s existing home.
In some cases, Ullrich and his business partner, Tom Covell, will even buy a home that doesn’t sell in time to allow a client to move into a new home.
“The resale market is slower. Cancellations have gone up,” said Peter Simons, division president with Atlanta-based Beazer Homes, which works with Ullrich locally. “We need to make sure buyers are able to sell their homes.”
Beazer, which operates its own financing arm, also offers a bridge loan to help buyers who must make two mortgage payment, and it also will defer payments on a new home mortgage for six months, Simons said.
Some builders are even willing to purchase a buyer’s home directly so they can close the deal.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
Losing ground
Median existing home-sales prices fell 1.7 percent in August 2006 from August 2005.
U.S. median home price
Aug. 2006 (preliminary) $225,000
July (revised) $230,000
June $229,000
May $229,000
April $222,000
March $218,000
Feb. $218,000
Jan. $220,000
Aug. 2005 $229,000
Source: National Association of Realtors
