Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends. (National Association of Realtors) Why Investors Care
| Released on 3/23/07 For Feb 2007 | ||||||||||||
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Highlights
Existing home sales rose sharply in February, up a very sharp 3.9 percent to a higher-than-expected annual rate of 6.69 million in news that will ease concern over the housing sector. Sales were strongest in the Northeast with other regions little changed. Note that the gain in the Northeast was made despite heavy weather. But supply on the market failed to improve, at 6.7 months vs. 6.6 months in both January and December.
Existing home sales have been slowing for 18 months, showing their sharpest year-on-year decline in September at 14 percent. But declines have been narrowing since, at only 3.6 percent in February. The median price, up 9 tenths in February to $212,800, peaked last July at $230,200 and has since eroded. It's this shift in home prices that has already hurt demand for home products and some argue will eventually slow consumer demand in general.
The impact of subprime trouble, on the financial system and on loan standards, is a new factor for the housing market. But February's data so far have been strong, showing sharp gains in housing starts (data released Tuesday) and now existing home sales. New home sales data will be released Monday. Treasuries eased in immediate reaction to today's report.
Existing home sales rose 3.0 percent in January to an annual rate of 6.46 million and followed a 0.3 percent increase in December. Sales nonetheless remain soft with sales still down 4.3 percent on a year-on-year basis. The debate over whether housing has turned continues - especially since new home sales for January went in the opposite direction as existing home sales, falling 16.6 percent for the month. For both existing and new home sales, supply is a concern for the markets. Supply for existing home sales improved to 6.6 months in January. The usual caveat for housing data in winter applies - seasonal adjustment is difficult and minor deviations from seasonal averages can lead to large swings in seasonally adjusted data. We may see this in February housing numbers across the board due to atypically severe weather in some parts of the U.S.
Existing home sales Consensus Forecast for February 07: 6.26 million-unit rate
Range: 6.19 to 6.50 million-unit rate
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Existing home sales reached a peak in mid-2005 and have been easing since. Typically, a distinct reverse relationship exists between home sales and mortgage rates. |
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