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 2/25/08 For Jan 2008 | ||||||||||||
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Highlights
Existing home sales, perhaps the most important of all housing data, are not signaling improvement in the housing sector, a disappointment that will deepen talk of recession. Existing home sales slipped 0.4 percent in January for a 23.4 percent year-on-year decline that's the worst on record. The only good news in the report is that condos, a secondary category down 6.5 percent in January, was behind the month's decline as sales of single-family homes rose 0.5 percent. Year-on-year, condo sales are down 30.2 percent with single-family sales down 22.4 percent. Regions showed little variation in the month.
Supply is the real bad news in the report, swelling to 10.3 months from 9.7 months in December. The median price fell 2.9 percent in the month to $201,100 for a year-on-year decline of 4.6 percent. Prices have begun to slip the last few months, but sellers continue to keep their homes on the market.
The inventory level will keep pressure on construction firms and construction jobs. The weak housing sector will continue to take a toll across other sectors of the economy, including home products retailers such as Lowe's which just today warned of declining sales through the year. There was little immediate reaction to the results but they are likely to pull Treasury yields lower and push stocks and the dollar down. Sales data for new homes will be released Wednesday.
Existing home sales declined another 2.2 percent in December to a 4.89 million annual rate, setting a new low for the nine years of data in the series. December sales dipped across regions. Year-on-year sales for the nation were down 22 percent at year end. One small bright spot in the latest report was that supply edged back down to 9.6 months from 10.1 months in November. A year-ago supply was 6.6 months, a time when sales had already been on a long descent from September's 2005 peak rate of 7.21 million. However, the latest improvement may be little more than home sellers losing hope and taking homes off the market. For the supply improvement to be meaningful, we need to see both a rise in sales and a decline in supply.
Existing home sales Consensus Forecast for January 08: 4.84 million-unit rate
Range: 4.65 to 4.95 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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