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 10/24/08 For Sep 2008 | ||||||||||||
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Highlights
The worst may be over for the housing sector, a possibility raised by improvement in pending home sales and now a solid gain in existing home sales. Sales of existing homes jumped 5.5 percent in September to an annual rate of 5.18 million -- the best rate since August last year. The month-on-month percentage jump is the best in more than five years while the year-on-year rate of +1.4 percent is the first positive rate in three years. Of course these gains are being made against easy comparisons, in fact against record lows. Gains were concentrated in the West which has been hardest hit during the downturn.
The bad news in the report is a steep drop in prices. The median price plunged 5.7 percent in the month of September for a year-on-year decline of 9.0 percent. Price declines are certain to raise foreclosures and are definitely more bad news for financial firms. But supply on the market is down, at least a bit at 9.9 months supply vs. 10.6 months in August.
Today's report is offering some good news for financial markets badly in need of good news. The dollar and Treasuries showed little reaction to the report though stocks appeared to get a lift. New home sales data will be released Monday.
Existing home sales fell 2.2 percent in August to a 4.910 million unit rate. Condo sales dropped 8.2 percent while single-family home sales fell a less alarming 1.4 percent. The year-on-year rate, helped by continually declining baselines for the year-ago level, is less frightening at minus 10.7 percent in August for the least severe dip since July 2007. Supply - while still excessive - is beginning to ease off its worst overhang. Months' supply edged down to 10.4 months in August from 10.9 months in July. Prices have been in nearly uninterrupted decline for two years with August posting a 3.4 percent drop to $203,100 and a year-ago decline of 9.5 percent. But given the 7.4 percent jump in pending home sales for August, we may see a rebound in existing sales in September.
Existing home sales Consensus Forecast for September 08: 4.92 million-unit rate
Range: 4.70 to 5.11 million-unit rate
![[Chart]](chart.gif)
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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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