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 6/25/07 For May 2007 | ||||||||||||
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Highlights
Existing home sales came in right at expectations, at a 5.99 million annual rate in May for the lowest since June 2003 -- offering perhaps the clearest evidence of all of the housing slowdown. The year-on-year decline is steady in low double digits, at 10.3 percent in the latest month. Supply on the market is at its highest since 1992, at 8.9 months and compared with 8.4 months in April. Sooner or later high supply will press down prices, which however remain firm at a median $223,700 for a month-to-month increase of 1.8 percent and only a 2.1 percent decrease year-on-year.
Other details showed a month-to-month sales dip in the South and West with the Midwest about flat the Northeast showing a moderate improvement. Year-on-year, sales are weakest in the West and South followed by the Midwest with the Northeast showing the least decline. Total sales of single-family homes slipped 0.8 percent in the month for a 10.8 percent year-on-year decline. Condos are showing less weakness with a 2.6 percent monthly gain and a 6.7 percent decline on the year.
Financial markets showed little to no reaction to the data which will keep in place expectations for soft results in tomorrow's new home sales report. The housing sector may be finally stabilizing though the increase in supply will be a concern -- especially for Realtors, construction firms and makers and retailers of home products.
Existing home sales fell 2.6 percent in April to an annual rate of 5.990 million that was below outside expectations. Sales are at a cycle low and are down 16.9 percent from the cycle peak of 7.210 million units set in September 2005. While employment has been moderately healthy, other factors are working against a pickup in sales for now. Mortgage rates have picked up substantially in recent months and lenders have tightened lending standards. While markets have low expectations for sales, supply will be a key focus since supply overhang is weighing on new construction. Supply jumped to 8.4 months in April from an already high 7.4 months in March.
Existing home sales Consensus Forecast for May 07: 5.99 million-unit rate
Range: 5.85 to 6.15 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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