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 4/22/08 For Mar 2008 | ||||||||||||
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Highlights
In mixed news for the housing sector, existing home sales dropped 2.0 percent in March to a 4.93 million annual rate. But the decline is no surprise with the rate hitting expectations but behind only December and January as the lowest rate in nearly 10 years of available data. Supply on the market is the real bad news, rising to 9.9 months vs. 9.6 months in February. Bloated supply is pressing down on home prices though prices did pop up 2.5 percent in the month to a median $200,700. But the year-on-year rate of -7.7 percent is next only to February's -8.2 percent for the steepest price decline on record, very bad news for consumers and homeowners especially those who are finding it difficult to make mortgage payments.
The year-on-year rate for sales is at -19.3 percent, a small improvement over the last five months that show an average of -21.9 percent. March's weakness was centered in the most important component of single-family homes where sales fell 2.7 percent in the month for an 18.4 percent year-on-year decline. Yet the year-on-year rate is still an improvement, however slight, over the prior six months. Sales of condos, the report's other component, rose 3.6 percent but show a 25.5 percent year-on-year decline. By region, the Northeast, which is a mature and less speculative market, generally continues to show less weakness than other regions which has been a trend in recent home sales data.
The accompanying text of the report said tightening lending standards are keeping buyers out of the market, though it described sales as soft yet stable. Stable is the best description that this report can offer, results that at least won't deepen concerns over the housing market for now. New home sales data will be released Thursday and an improvement in those results could renew hopes that the sector is turning the corner. Financial markets showed no immediate reaction to the results.
Existing home sales rose in February, up 2.9 percent to a 5.030 million rate in what is rare good news for the housing sector. Sales of single-family homes, the most important category in the report, rose 2.8 percent to a 4.890 million rate, with sales of condos up 3.7 percent to a 560,000 rate. Lower prices helped nudge overall sales up in the latest month. Importantly, the improved sales rate helped ease supply on the market, which fell to 9.6 months from 10.2 months. While that is some improvement, the housing market still has a very long way to go to eliminating inventory overhand. But, looking ahead, the prognosis is not good. The latest data on pending home sales fell 1.9 percent in February.
Existing home sales Consensus Forecast for March 08: 4.95 million-unit rate
Range: 4.82 to 5.08 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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