The new home sales report for January was downright dismal. So how did the existing market fare?
* Existing home sales dropped 7.2% to a seasonally adjusted annual rate of 5.05 million in January. That was well below forecasts for a reading of 5.5 million.
* Regionally, sales were down across the board. They fell 5.2% in the West, 6.9% in the Midwest, 7.4% in the South, and 10.9% in the Northeast. By property type, single family sales dropped 6.9%, while condo and coop sales fell 8.1%.
* The raw number of homes for sale slipped 0.5% to 3.265 million from 3.283 million in December. Compared with a year earlier, supply has fallen 9.6%. The months supply at current sales pace indicator of inventory rose to 7.8 from 7.2; that’s the highest since September. Median prices fell 3.4% to $164,700 in January from $170,500 in December. On a year-over-year basis, prices were unchanged.
New Year’s revelers weren’t the only ones with hangovers in January. Both the existing and new home sales markets clearly suffered from one related to the home buyer tax credit. The credit juiced sales in mid-2009 for new homes and late-2009 for existing homes. Yet in its wake, demand is clearly tapering off. The extension and expansion of the credit should help later in the spring selling season as the new deadline looms. But so far, it just isn’t happening, with sales plunging almost 23% in the past two months.
Is there any good news in the latest batch of figures? Well, the supply of homes for sale continues to shrink. We’ve chipped away at the mountain of inventory to the tune of 1.3 million units over the past year and a half. That’s a sign of progress. With median prices now running at their lowest level since May 2002, we’re also taking care of the housing affordability problem that helped burst the bubble in the first place. That’s cold comfort for upside-down homeowners. But it’s exactly what we need to prompt some bottom-fishing by today’s budget-conscious buyers.
{ 3 comments… read them below or add one }
Two concerns:
1/The first elephant in the room is interest rates. I’m not as confident that rates can be kept as low as they have been especially for as long as it will take to clear the real overhang.
2/ The second is the manaement of the “hidden” overhang. Much of the overgang is not even listed for sale or hit default yet (alt-arm,…) Managing the debt load tsunami may become uncontrollable.
Anecdotallly, the supply is going up. I have seen five new for sale signs on my two mile route to work in just the past three days. Hope continues.
Two empty houses and three with cars in the drives.
I know we disagree on this, but with the credit still putting people with no skin in the game into homes, the fact that many of the starter home sales are not creating the (normal) move up home sales and the government backing, or funding, nearly all new mortgages, trouble is brewing.
We haven’t seen bottom yet, because unrealistically the government has been attempting to recreate the boom years – which were a falsehood and cannot, should not, be recreated.
If the government would have cut taxes, regulations and truly looked at the “free trade” laws, to the tune of the trillions gifted to the banks and deadbeats, maybe then we could call bottom.
People making minimum wage on part time jobs can’t buy homes – nor should they – but, sadly, those seem to be the only jobs we have – and the only we are going to have left.
People should not stress out over real estate. Whatever happens is all relative. If you sell a home low, you can buy a replacement low. Everyone is in the same boat. Low prices enable first-time buyers to get a good deal providing they can get a loan.
I personally will be ecstatic if interest rates were to reach 10%, as in the past. If you are a saver and not a borrower, making a good interest rate would be great because you could get out of the crazy market and relax and watch the savings mount up.