Existing Home Sales - March 2010

From CNNMoney.com, "Existing home sales soar in March":

Existing home sales jumped 6.8% in March, with home buyers racing to get a tax credit that expires in April, according to a real estate industry report released Thursday.

The National Association of Realtors reported that existing home sales rose last month to a seasonally adjusted annual rate of 5.35 million units, up from the revised rate of 5.01 million in February. Sales year-over-year were up 16.1%.

March can say you thank you to the federal tax credit!

Sales of Existing U.S. Homes Rise

As reported by Bloomberg.com - "Sales of Existing U.S. Homes Probably Climbed as Prices Fell":

Sales of existing U.S. homes probably climbed in July to the highest level in 10 months, signaling the housing crisis that crippled the world's largest economy is easing, economists said before a report today.

Purchases rose 2.1 percent to a 5 million annual rate, according to the median forecast of 64 economists in a Bloomberg News survey. It would be the fourth consecutive gain, capping the longest stretch of increases since 2004.

As noted in our previous post, "Housing Affordability", many factors are contributing to the immediate changing housing conditions:

Foreclosure-driven declines in prices, government credits for first-time buyers and near-record-low borrowing costs may keep stoking demand, helping the economy recover from the worst recession since the 1930s. Ongoing job losses are a reminder that more Americans will probably lose their homes, indicating a rebound will be slow to take hold.

'We've begun a recovery in home sales,' said Ellen Zentner, senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. 'This is the best time to buy a house if you can qualify for credit. We expect to see continued, but gradual, improvement.'

Do you think this trend of stabilizing home sales and prices will continue or is this just a minor positive blip in a gloomy housing future still to come?

February Existing Home Sales Rise While Home Prices Tank

As reported my CNNMoney.com - "Existing home sales spike 5%":

Sales of existing homes unexpectedly rose in February, recovering from a sharp drop in the previous month, according to an industry report released Monday.

The National Association of Realtors said that existing home sales rose last month to a seasonally adjusted annual rate of 4.72 million million units, up 5.1% from a rate of 4.49 million in January. February sales were down nearly 5% from year ago levels.

Who's buying?

The report said first-time buyers made up half of all purchases in February, and that sales of distressed properties accounted for about 45% of all transactions.

Where the sales were HOT?

Sales were unexpectedly strong in the West, with activity increasing more than 30% over last year.

Median home price drops:

The national median existing-home price was $165,400 in February, down 15.5% from last year, when the median price was $195,800.

Inventory levels:

Meanwhile, the total number of existing homes on the market at the end of February rose 5.2% to 3.80 million units. At the current sales pace, it would take an estimated 9.7 months to sell down that inventory of properties.

The report also said the total number of homes for sale has steadily declined over the past six months from a record level last July.

Falling home prices have been translating into increased sales activity and trending lower inventory levels. Couple that with 4-5% interest rates and home buyer credits .... bargains and good deals abound.

Existing Home Sales Rise

From CNNMoney.com - "Existing home sales in surprise jump":

The number of existing homes sold in December rose 6.5% from the previous month, according to a report released Monday, as bargain hunters took advantage of plummeting prices.

The National Association of Realtors said that home sales increased to a seasonally-adjusted, annualized rate of 4.74 million units. That's up from a revised pace of 4.45 million units sold in November and more than the rate of 4.4 million units projected by a consensus of industry analysts as reported by Briefing.com.

Inventory shrinking?

Thanks to the sales increase, the number of homes available on the market decreased 11.7% in December from the previous month, to 3.68 million. That represents a 9.3-month inventory supply at the current pace of sales, down from a 11.2-month supply in November.

Surge in the West continues:

The number of homes sold nationwide was buoyed by a surge in the West, where the housing market has been hardest hit by a record number of foreclosures.

Existing home sales in the West surged 13.6% to an annual rate of 1.25 million in December, up 31.6% from a year ago. But the median price in the West was $213,100, down 31.5% from December 2007.

In the South, existing home sales increased 7.4% to an annual pace of 1.74 million in December, but that was still 11.2% lower than December a year ago. And sales in the Midwest increased 4% in December to an annual rate of 1.04 million, but were down 10.3% from the same period last year.

The Northeast saw sales edge 1.4% lower, to an annual pace of 720,000 in December, down 14.3% from December 2007.

Some markets are trying to turn the corner - a phrase that has been tossed around of recent. Yet, in many of these same markets, we have not yet seen price stability. Sound like a contradiction? It's not and I think this is an important point to address in greater detail.

We're trying to determine a bottom by evaluating market data and trends. Obviously, we know we've already hit bottom when housing prices stop dropping and ultimately start inching back up. Similarly, we knew housing was starting its crash when prices stopped rising and started falling. A lot of good it does us figuring it out after the fact.

Ultimately, all of this comes down to simple supply and demand. Greatly simplified, lots of inventory equals more choices for buyers, stiffer competition for sellers, and softer home prices. As inventory tightens, the exact opposite occurs. When inventory levels constrict considerably and loans are given with reckless abandon, you have a housing boom.

Right now, banks are finally starting to move inventory by drastically dropping and aggressively pricing their properties. As a result, prices will continue to drop as sales are made and newer comparables are booked at the lower price points. The important point here is that inventory, now that the price is "right", is moving. As registered in this latest report, buyers are buying. In fact, many of the overheated markets are starting to see what looks to be a stabilization of inventory levels, new building starts and permits are at record lows, mortgage rates are cheap, and sales are trending up.

My crystal ball remains broken and it's nearly impossible to determine how all of the economic variables will play into determining the exact portrait of our housing future. However, even though these reports don't scream "it's the bottom" they're telling us that something is happening and the something, for the first time in years, is collectively moving in the right direction.

Until it's in the rear view mirror, it will be impossible to pinpoint that exact time when bottoms are hit or tops are reached, but the data will let you know that the time is near and the getting is good enough.