Interest Rate Roundup

Existing home sales inch up in October

noreply@blogger.com (Mike Larson) — Mon, 21 Nov 2011 15:01:00 +0000

We just got our latest look at existing home sales from the National Association of Realtors. Sales rose 1.4% to a seasonally adjusted annual rate of 4.97 million in October from 4.9 million a month earlier. That topped expectations for a reading of 4.8 million. We saw strength in most of the country, with sales up 2.1% in the South, 2.8% in the Midwest, and 4.4% in the West. Sales fell 5.1% in the Northeast.

Single family transactions led the way with a gain of 1.6%, while condo and coop sales were flat on the month. The supply of homes for sale dipped to 3.33 million from 3.406 million in September. That was equal to 8 months of supply at the current sales pace, down from 8.3 a month earlier. Meanwhile, the median price of a used home fell to $162,500 from $165,800 in September. That was also down 4.7% from a year earlier.

The housing market is showing a slight improvement in tone these days, with builder optimism and now, used home sales perking up. Strength was broad based in October, led by the core single-family market. That said, we're still talking about a low level of activity overall. Pricing also remains weak, and distressed inventory continues to find its way into the market courtesy of an ongoing wave of foreclosures.

We also have to watch the credit markets closely. The European chaos is spreading into more and more corners of the banking sector and capital markets. That could lead to tightening credit standards in the mortgage market, exactly what potential home buyers DON'T need right now.

New home sales rise as prices plunge

noreply@blogger.com (Mike Larson) — Wed, 26 Oct 2011 14:02:00 +0000

We just got the latest data on home sales and pricing, and it was a mixed bag. New home sales rose 5.7% to a seasonally adjusted annual rate of 313,000 in September from 296,000 in August. That topped forecasts, and it leaves sales at the highest level since April. Sales rose in two of four regions (the West and South), and fell in the other two (the Northeast and Midwest).

But the median price of a home fell off the table, dropping 3.1% on the month, the third straight decline. Prices were also down 10.4% from a year ago, the biggest monthly drop in more than two years. At $204,400, median prices haven't been this low since last October. The raw number of homes for sale remained at a multi-decade low of 163,000, while the "months supply at current sales pace" indicator of inventory dipped to 6.2 from 6.6.

We continue to get mixed data on housing, with sales stabilizing at relatively low levels but home prices coming under significant pressure. It seems the only way to generate volume in an era of falling consumer confidence, tighter lending standards, and stiff competition from distressed inventory is to slash prices. And that's precisely what new home builders appear to be doing.

We have managed to cut new home inventory to the bone. So once the supply of used homes falls significantly, builders will be in a stronger pricing position. But that's a process that will take a couple of years, rather than months. If you're a home builder, you have to stay lean and mean if you want to survive.

Existing home sales slump in September

noreply@blogger.com (Mike Larson) — Thu, 20 Oct 2011 14:08:00 +0000

We just got a look at September existing home sales figures. Total sales fell 3% to a seasonally adjusted annual rate of 4.91 million from 5.06 million in August. That was right in line with the estimates of economists polled by Bloomberg. Single-family sales dropped 3.6%, while condo sales rose 1.8%.

The "months supply at current sales pace" indicator of inventory inched up to 8.5 from 8.4, while the raw number of homes for sale dipped 2% to 3.48 million. Meanwhile, the median price of an existing home fell sharply to $165,400 from $171,200 a month earlier. That was down 3.5% from a year ago.

September was another lackluster month for the housing sector, with used home sales falling slightly and home prices slipping a bit. Tighter lending standards and ongoing weakness in the labor market are combining to cap demand, while an ongoing influx of foreclosed properties is keeping the supply of homes for sale from declining sharply. The result is continued pressure on home pricing, and a stagnant buying climate.

Housing starts rise as multifamily perks up

noreply@blogger.com (Mike Larson) — Wed, 19 Oct 2011 12:33:00 +0000

The September housing starts figures were just released and they popped by a surprising 15%. The 658,000 seasonally adjusted annual rate of starts was well ahead the median forecast of 590,000 and the highest since April 2010. We saw broad-based regional strength as well, led by the West with a gain of 18.1%.

However, the strength was mostly in the multifamily sector, where starts surged 51.3%. The less-volatile single-family market was more subdued, with a gain of only 1.7%. On the building permits front, we saw a slide in both the multifamily (-14.5%) and single-family (-0.2%) sectors. That left permits at a five-month low, portending a slowdown in future construction. The West led with a 9% decline in permits.

Construction of multifamily properties like apartments, condos, and town homes perked up in September, helping push housing starts to the highest level in 17 months. However, permitting activity slipped and the less-volatile single-family market remains subdued. So once again, we're left with a mixed bag of news on the housing front. It will take a more vigorous rebound in the labor market, an improvement in consumer confidence, and a loosening of lending standards to really rev up the housing market's engine again. Unfortunately, those forces don't appear to be coming together.

Pending home sales dip in August

noreply@blogger.com (Mike Larson) — Thu, 29 Sep 2011 13:58:00 +0000

The latest pending home sales figures were just released, and they showed a 1.2% drop between July and August. That was the second monthly decline in a row and it left the seasonally adjusted index at 88.6, the lowest since April. Sales fell 2.4% in the West, 3.7% in the Midwest, and 5.8% in the Northeast. Sales rose 2.6% in the South.

We already knew the new home market slipped to a multi-month low in August. Now, it appears we're seeing the same deterioration in the "used" home arena. While mortgage rates remain historically low, buyers simply lack the confidence to step up to the plate and buy homes. They're worried about losing their jobs, and rightfully so. As a result, housing continues to act like an anchor around the neck of the economy, preventing a meaningful recovery.

New home sales slump to six-month low

noreply@blogger.com (Mike Larson) — Mon, 26 Sep 2011 14:09:00 +0000

We just got new home sales figures for August, and they were nothing to write home about. Sales fell 2.3% to a seasonally adjusted annual rate of 295,000 from 302,000 a month earlier. That was roughly in line with the average forecast of analysts polled by Bloomberg.

The number of homes on the market continued to sink, hitting 162,000 last month. That's the lowest level in the history of the U.S., and roughly 6.6 months of supply at the current sales pace (in line with the last several months). Too bad it didn't do anything to support pricing - median home prices fell 7.7% on a yearly basis and 8.7% from a month earlier. At $209,100, new home prices are the lowest since last October.

A weakening economy, falling consumer confidence, and tighter credit standards are all weighing on housing demand. New home sales fell to a six-month low in August, with declines in three out of four regions of the country. Pricing was also weak, despite there being an extremely low level of new homes for sale. That's proof positive that competition from a glut of existing, "nearly new" homes is still weighing heavily on the market. Bottom line: The hunt for that elusive, long-lasting housing bottom continues!

Existing home sales pop in August

noreply@blogger.com (Mike Larson) — Wed, 21 Sep 2011 14:02:00 +0000

We just got existing home sales figures for August, and they were definitely better than expected. Sales rose 7.7% on the month to 5.03 million at a seasonally adjusted annual rate. That was the highest in five months and above the average forecast of 4.75 million. Single-family sales gained 8.5% while condo and coop sales rose 1.8%.

There was broad-based regional strength, with sales up 2.7% in the Northeast, 3.8% in the Midwest, 5.4% in the South, and 18.3% in the West. The number of homes for sale dipped 3%, while the months supply at current sales pace indicator of supply fell to 8.5 from 9.5. The median price of a home fell to $168,300 from $171,200 in July. That was also down 5.1% from a year earlier.

Sales of existing homes topped expectations in August, with widespread regional strength and a nice decline in inventory. That's the good news. The bad news is that these are lagging figures -- they reflect contracts signed a month or two prior. Other leading indicators of housing demand, including builder optimism and mortgage activity, point to future weakness. In fact, home purchase loan demand just fell to the lowest level since February.

Long story short? Housing isn't falling off a cliff. But it's not recovering either. That lack of a recovery, in turn, is impeding the broad economy's emergence from the Great Recession.

Starts slip in August

noreply@blogger.com (Mike Larson) — Tue, 20 Sep 2011 12:32:00 +0000

The latest housing starts figures just hit the tape. Starts fell 5% to a seasonally adjusted annual rate of 571,000 in August from 601,000 a month earlier. That missed expectations for a reading of 590,000. On the flip side, building permits rose 3.2% to a 620,000 SAAR from 601,000. That was slightly above forecasts for a reading of 590,000.

Starts fell 1.4% in the single-family market and 13.5% in the multifamily arena. They were up 2.2% in the West and 2.6% in the Midwdest, but down 3.3% in the South and 29.1% in the Northeast. As for permits, they rose 2.5% in single-family and 4.5% in multifamily. Permits were up in most of the country -- 3.3% in the Northeast, 6.3% in the Midwest and 11.3% in the West. They fell 1.3% in the South.

The housing market continues to muddle along, with little net progress. Builder optimism, mortgage applications, sales activity and now, construction activity, all remain mired near their recent lows. In August, for instance, construction activity slipped to a three-month low -- off almost 6% from a year ago. Permitting activity was a bit better, but still a few hundred thousand units below what you would call healthy. In other words, the patient has a pulse, but it sure isn't a strong one!

Pending home sales dip in July

noreply@blogger.com (Mike Larson) — Mon, 29 Aug 2011 14:01:00 +0000

Pending home sales dipped in July, falling 1.3% on the month. That was roughly in line with expectations. Regionally speaking, sales fell 0.8% in the Midwest, 2% in the Northeast, and 4.8% in the South. They rose 3.6% in the West.

The pending home sales figures fall into the same "lackluster" category as all the rest of the recent housing data. Low mortgage rates are simply not enough to overcome all the obstacles out there -- including elevated unemployment, slumping consumer confidence, and the fear of declining prices down the road. I continue to expect little net progress for housing in 2011, with demand remaining anemic and the excess supply of homes only gradually coming down.

New home sales slip to 5-month low

noreply@blogger.com (Mike Larson) — Tue, 23 Aug 2011 14:03:00 +0000

New home sales figures for July were just released. They showed that sales dipped 0.7% to a seasonally adjusted annual rate of 298,000 from a downwardly revised 300,000 in June. That was slightly worse than the 310,000 sales economists were looking for, and the lowest level since February.

The raw number of homes for sale dipped against to 165,000 from 166,000 a month earlier, while the "months supply at current sales pace" indicator of inventory held at 6.6. The median price of a new home fell 6.3% from $236,800 in June to $222,000 in July. But that was still up 4.7% from a year earlier.

July was another lackluster month for the new home market, with sales slumping in the key West and South regions and pricing taking another turn for the worse. Early reports suggest sales may be even worse in August given the slump in the economy and the sharp drop in consumer confidence we've seen. It all goes back to the labor market -- If we can't create many more jobs in this country, we're not going to see a lasting rebound in housing demand. And it sure doesn't look like unemployment is going to fall sharply anytime soon.

Pending home sales rise in June

noreply@blogger.com (Mike Larson) — Thu, 28 Jul 2011 14:05:00 +0000

New home sales have slumped for two months in a row, but pending sales of existing homes rose again in June -- by 2.4% after an 8.2% rise a month earlier. That topped expectations for a 2% decline. By region, sales were down 0.4% in the Northeast and down 3.7% in the Midwest, but up 4.4% in the South and up 6.4% in the West. The index level of 90.9 was the highest since March. Clearly, the pattern of uneven housing data continues. Sales, construction activity, and pricing are gyrating around from month to month, but making little net progress overall.

New home sales slip in June; Pricing weak

noreply@blogger.com (Mike Larson) — Tue, 26 Jul 2011 14:01:00 +0000

We just got the latest figures on new home sales from the Census Bureau. They slipped 1% to a seasonally adjusted annual rate of 312,000 in June from 315,000 in May. That was the second decline in a row and it was slightly below forecasts for a reading of 320,000 sales. Sales fell 15.8% in the Northeast and 12.7% in the West, but rose 9.5% in the Midwest and 3.4% in the South.

As for pricing, the median price of a new home rose 5.8% on the month to $235,200. That was also up 7.2% from a year ago. The raw number of new homes for sale declined to 164,000 in June, good for a 6.3 month supply at the current sales pace.

In other news, the S&P/Case-Shiller Home Price Index dropped 4.51% year-over-year in May. That was the biggest decline in 18 months. On a seasonally adjusted basis, prices in 20 top metropolitan markets fell a marginal 0.05% between April and May.

The housing market continues to fumble around without making much net progress. Sales picked up a bit in the spring, but momentum appears to be fading again. Construction activity has increased somewhat, but it still remains well below average. Home prices are stabilizing, but not really gaining back any of the ground they've lost in the past half-century.

Bottom line: Some pundits use the term "bouncing along the bottom" to describe market conditions. I like to picture a ship caught in the doldrums. It's not as bad as being swept away in a hurricane. But it isn't going to get you where you want to go!

Existing home sales slip in June

noreply@blogger.com (Mike Larson) — Wed, 20 Jul 2011 14:01:00 +0000

In the wake of yesterday's strong housing starts report, there was some optimism that sales would pick up as well. But did they? Not in the existing home arena. Sales slipped 0.8% in June to a seasonally adjusted annual rate of 4.77 million units from 4.81 million a month earlier. That missed forecasts for a pick up to 4.9 million and was the lowest level for sales since November.

By property type, single family sales were flat while condo and coop sales dropped 7%. The months supply at current sales pace indicator of inventory rose to 9.5 from 9.1, while the raw number of homes for sale also climbed -- to 3.765 million from 3.646 million a month prior. That is down more than 3% from a year earlier, however.

The median price of a new home rose to $184,300 from $169,300 a month earlier. That was up 0.8% from a year earlier and interestingly enough, the highest since October 2008.

It looks like a bit of a mixed bag of news on the housing front - par for the course in this market! Sales slumped to the lowest level in seven months, and the supply of homes for sale remained ample. Yet the price of the homes that did sell rose again, touching the highest in a couple of years. It's tough to see that holding up with disappointing sales volume, and the high level of cancellations. But it's worth noting.

Going forward, it's all about the job market. If we start consistently creating jobs in this country, housing will recover. If we don't, it won't. Sure it sounds simple. But it has the added benefit of being true.

Housing starts pop in June

noreply@blogger.com (Mike Larson) — Tue, 19 Jul 2011 12:34:00 +0000

We just got the latest figures on home construction and they were strong. Housing starts popped 14.6% in June to a seasonally adjusted annual rate of 629,000 from 549,000 in May. That was well above the 2.7% increase that economists were forecasting, and it leaves starts at their highest level since January.

Building permits rose by a more modest 2.5% to a SAAR of 624,000, but that did top expectations for a decline of 2.3%. By property type, single family starts rose 9.4% while multifamily starts jumped 30.4%. Permits gained 0.2% in the single family market and 20.8% in the multifamily arena.

It looks like spring did come to the housing market ... just a little late! Construction activity ramped up in June to a multi-month high, while single-family permitting rose for the fourth straight month. Inventories of new homes are extremely lean and interest rates remain low, two factors that likely encouraged builders to pick up the pace a little.

The key question is whether this is the start of a new trend, or if we're just being set up for disappointment again. Starts and permits picked up in late 2010 and early 2011, for instance, only to fizzle out.

Personally, I'm not terribly optimistic. We're still dealing with a massive overhang of foreclosed and distressed "used" housing inventory. The economy appears to be weakening again. And the labor market is dead in the water. People who don't have jobs don't buy houses. It's as simple as that. So construction won't pick up on a consistent basis until we start creating jobs in this country.

New home sales slip in May

noreply@blogger.com (Mike Larson) — Thu, 23 Jun 2011 13:58:00 +0000

The latest new home sales figures just hit the tape. According to the Census Bureau, sales fell 2.1% between April and May. The seasonally adjusted annual rate of 319,000 was slightly above expectations for a reading of 310,000. Sales fell 3.5% in the West and 26.7% in the Northeast; they were unchanged in the Midwest and up 2.4% in the South.

The raw number of homes for sale keeps falling. It slipped to 166,000 in May from 172,000 a month earlier. That's the lowest level in the history of record keeping, which dates back to 1963. The "months supply at current sales pace" indicator dipped slightly to 6.2 from 6.3. Median prices gained 2.6% on the month to $222,600 from $217,000, but that was still down 3.4% from a year earlier.

Signs of life in the new housing market? Not yet. Sales slumped anew in May, while pricing remained weak on a year-over-year basis. I can't say it enough: We're clearly UNDERsupplied now in the new home industry. But builders have little incentive to build with all the competition they face from nearly-new, distressed homes. That means construction activity and construction hiring will remain anemic, undercutting the economic recovery. Bottom line: The housing market will likely remain lackluster for a period of years, not months or quarters.

Existing home sales slump in May

noreply@blogger.com (Mike Larson) — Tue, 21 Jun 2011 13:46:00 +0000

The National Association of Realtors reported on existing home sales figures for May today.

* Sales slumped 3.8% to a seasonally adjusted annual rate of 4.81 million from 5 million in April. That was right in line with expectations and it leaves sales at the lowest level since November.

* Single-family sales dropped 3.2%, while condominium and co-op sales fell 8.1%. Sales slumped in most of the country, dropping 2.5% in the Northeast, 5.1% in the South, and 6.4% in the Midwest. They were unchanged in the West on the month.

* The months supply at current sales pace indicator of inventory climbed to 9.3 from 9. That's also the highest reading since November. The raw number of homes for sale slipped 4.4% from a year ago to 3.72 million. The median price of a used home fell 4.6% from a year ago to $166,500 from $174,600. That was up 3.4% on the month, however.

Home sales remain depressed in the U.S. Sales fell to a six-month low, with transaction volume sinking or flat in all regions of the country. Chalk the weakness up to the same factors we've been discussing for some time: A lack of buyer confidence, a continued influx of distressed inventory, tighter credit standards, and a slowing economy. Buyers simply don't have the motivation or ability to snap up homes, and there is no reason to expect that dynamic to change for some time.

New home sales pop in April, inventory hits lowest level ever

noreply@blogger.com (Mike Larson) — Tue, 24 May 2011 14:02:00 +0000

We just got the latest look at the new home market from the Census Bureau. Sales rose 7.3% to a seasonally adjusted annual rate of 323,000 in April from 301,000 in March. That beat economist expectations for an unchanged reading, and it leaves sales at the highest level since December.

The number of homes for sale continued to decline, falling to 175,000 from 180,000 a month earlier. That's the lowest level in the 48 years the Census Bureau has been keeping track. The "months supply at current sales pace" indicator also dipped to 6.5 from 7.2. That's the lowest since the same month a year ago. Median prices rose 1.6% to $217,900 from $214,500 a month earlier. On a year-over-year basis, prices were up 4.6%.

We got a better-then-expected pop in new home sales in April, and a continued shrinkage in the amount of supply on the market. That's something, I suppose. But industry players continue to lack confidence in future sales, and they remain extremely reluctant to build more homes. Intense competition from the used home market is the primary culprit. Until we clear the inventory overhang there, we're just not going to get a noticeable increase in construction activity or hiring. I suspect that won't happen until 2013 or 2014.

Existing home sales slip in April

noreply@blogger.com (Mike Larson) — Thu, 19 May 2011 14:03:00 +0000

Existing home sales figures for April were just released. Sales dipped 0.8% to a seasonally adjusted annual rate of 5.05 million from 5.09 million a month earlier. That missed expectations for a reading of 5.2 million, and was down 12.9% from a year earlier.

Single-family sales fell 0.5%, while condominium and co-op sales slumped 3.1%. The Midwest was the only region showing a gain (5.7%). Sales fell 1% in the South, 1.6% in the West, and 7.5% in the Northeast.

The months supply at current sales pace indicator of inventory rose to 9.2 from 8.3; that was the highest since November. The raw number of homes for sale fell 3.9% from a year ago to a still-elevated 3.87 million. The median price of a used home rose 2.4% to $163,700 from $159,800 a month earlier. But that was still down 5% from a year ago.

The latest used home sales figures confirm what we've already seen in other reports. Sales remain lackluster, inventories remain elevated, and pricing remains weak. Buyers see little reason to jump into the market, given the ongoing economic weakness and concern about the future direction of home prices.

Housing starts, permits plunge in April

noreply@blogger.com (Mike Larson) — Tue, 17 May 2011 12:33:00 +0000

We just got our latest look at home construction, and it wasn't good ...

* Housing starts plunged 10.6% to a seasonally adjusted annual rate of 523,000 in April from an upwardly revised 585,000 in March. That missed expectations for starts of 569,000. Building permits fell 4% to a 551,000 SAAR from a downwardly revised 574,000 a month earlier. That also missed expectations for an increase to 590,000.

* By property type, single family starts slumped 5.1% while multifamily starts plunged 24.1%. The permitting breakdown was -1.8% for single family and -8.8% for multifamily.

* As for the regional breakdown, starts fell 4.8% in the Northeast and 23% in the South. They rose 3.7% in the West and 15.7% in the Midwest. Permits flat lined in the Northeast, but fell 0.8% in the West, 5.3% in the Midwest, and 5.7% in the South.

The housing market is a little like a pet rock. You keep starting at it, expecting it to start doing something ... anything! But month after month, it just sits there. In April, for instance, housing starts once again slumped into the low-500,000 annualized range while permitting activity faded 4%. That leaves home construction in the same depressed range it has been mired in for two and a half years.

The simple reality is that we had a once-in-a-lifetime bubble thanks to easy credit, nonexistent regulation, rampant speculation, and more. The government has responded by throwing hundreds of billions of dollars at the problem, while the Fed has been printing money like mad. Yet it has all accomplished very little. That just underscores the point I've made for a very long time -- the only "cure" for the housing bust is the passage of time and lower home prices.

Pending home sales pop in March

noreply@blogger.com (Mike Larson) — Thu, 28 Apr 2011 14:02:00 +0000

The National Association of Realtors just released pending home sales figures for March. Sales rose 5.1%, topping expectations for a 1.5% gain (though last month's result was revised down to +0.7%). Sales also remain 11.5% lower than they were this time a year earlier. By region, the South was the strongest with a gain of 10.3% on the month, followed by the West at 3.1% and the Midwest at 3%. The Northeast showed a decline of 3.2%.

Like the other housing reports we've seen, the pending sales report continues to show weakness, although conditions did improve somewhat from February. Buyers simply lack a catalyst to bid aggressively for homes, keeping overall activity subdued.

New home sales pop in March

noreply@blogger.com (Mike Larson) — Mon, 25 Apr 2011 14:00:00 +0000

New home sales rebounded in March, gaining 11.1% to a seasonally adjusted annual rate of 300,000 from an upwardly revised 270,000 in February. That left sales slightly ahead of economists' projections, but still at a very low level. The number of homes for sale sank to another multi-decade low of 183,000, while the median price of a home rose 2.9% from February to a level of $213,000. That's still 4.9% from a year ago however, underscoring the fact that builders are having a difficult time competing against deeply discounted foreclosures and other used homes.

Housing starts rebound in March

noreply@blogger.com (Mike Larson) — Tue, 19 Apr 2011 12:13:00 +0000

We just got housing construction figures for March. Here's what the numbers showed:

* Housing starts rebounded 7.2% to a seasonally adjusted annual rate of 549,000 from 512,000 in February. That was a little bit better than the consensus forecast of 520,000. Building permit issuance gained even more -- 11.2% to a 594,000 SAAR from 534,000 in February.

* By property type, single family starts gained 7.7% while multifamily construction rose 5.8%. Single family permit issuance rose 5.7% while multifamily permitting spiked 25.2%.

* Regionally, starts rose in most of the country. They gained 5.4% in the Northeast, 27.6% in the West, and 32.3% in the Midwest. Starts fell 3.3% in the South. As for permits, the story was similar. Permit issuance was unchanged in the Northeast, but up 6.3% in the South, 6.9% in the Midwest, and 37.1% in the West.

The housing market tried to pick itself off the mat in March. Starts and permits both bounced after a dismal performance in February, with relatively widespread regional gains. But this tired old boxer isn't going to get back in the ring for a title bout anytime soon. Tougher mortgage qualification standards, competition from cheap "used" houses and condos, and the anemic economic rebound are all continuing to pressure new home builders. That will keep a lid on construction and permitting activity for the foreseeable future.

Pending home sales climb in February

noreply@blogger.com (Mike Larson) — Mon, 28 Mar 2011 14:03:00 +0000

Pending home sales figures were just released by the National Association of Realtors. They showed some modest improvement, with sales up 2.1% in February compared to expectations for an unchanged reading. Transactions rose 2.7% in the South, 4% in the Midwest and 7% in the West, but fell 10.9% in the Northeast. At the same time, sales were still down more than 9% from a year earlier, underscoring the fact that housing continues to struggle.

New home sales implode in February

noreply@blogger.com (Mike Larson) — Wed, 23 Mar 2011 14:01:00 +0000

The latest new home sales figures were just released and the news wasn't pretty. To recap:

* New home sales plunged 16.9% to a seasonally adjusted annual rate of 250,000 in February from 301,000 a month earlier. That was far below the 290,000 average forecast of economists and the worst reading in the 48 years the government has been keeping track. It also comes on top of a 9.6% drop in January.

* The number of homes for sale held steady at 186,000 units, the lowest since November 1967. But the slowdown in sales caused the "month supply at current sales pace" indicator to blow out to 8.9 from 7.4. That's the highest since August 2010.

* Median prices plunged 13.9% on the month to $202,100 from $234,800. That was also an 8.9% year-over-year drop and it leaves prices at the lowest level since December 2003.

The latest home sales figures stink, plain and simple. Sales fell in every region of the country, led by the Northeast and Midwest. Overall transactions hit the lowest level in almost a half-century. Plus, home prices slumped sharply to the lowest in more than seven years.

There literally is nothing good to say here, other than that builders are responding rationally to tough market conditions by not adding more inventory to the mix. As we slowly work down the overhang of existing homes on the market, stability will return to pricing and builders will find themselves in a better place. Until then? They'll continue to batten down the hatches and try to ride these lousy conditions out.

Existing home sales slump in February

noreply@blogger.com (Mike Larson) — Mon, 21 Mar 2011 13:57:00 +0000

The existing home sales figures for February were just released. Here's a recap:

* Sales fell 9.6% to a seasonally adjusted annual rate of 4.88 million units from 5.4 million in January. That was much worse than the 5.12 million average forecast of analysts polled by Bloomberg.

* By property type, single-family home sales dropped 9.6% while condominium and coop sales fell 10%. By region, sales fell across the board -- 7.2% in the Northeast, 8% in the West, 10.2% in the South, and 12.2% in the Midwest.

* The number of homes on the market rose to 3.488 million from 3.369 million a month earlier. That was down about 1.2% from year-earlier levels, however. The "months supply at current sales pace" indicator of inventory popped to 8.6 from 7.5 a month earlier. The median price of an existing home dipped to $156,100, off 5.2% from a year ago and the lowest going all the way back to April 2002.

After a nice pop at the end of last year, the housing market is stumbling once again. Existing home sales dropped twice as much as expected in February, with activity deteriorating in every region and across property types. While the supply of homes for sale has stabilized, we remain grossly oversupplied. As a result, home prices slipped to a fresh nine-year low last month.

The latest figures underscore the lengthy nature of the housing market "recovery" -- if you even want to call it that. We still have too many homes on the market, and too few qualified buyers willing to step up to the plate. That's keeping the pressure on home pricing. I expect these stagnant, post-bubble market conditions to persist for several quarters as we gradually work off the excesses of the early 2000s.