Monday, March 21, 2011

Existing Home Sales Down 9.6%; Sales Prices Down 5.2% From Year Earlier

After generally following an upward trend over the past six months, existing home sales fell back sharply in February. Sales dropped 9.6% to an annualized sales pace of 4.88 million units. The decline wiped out most of the rise over the prior two months. From a year prior, sales were down 2.8 %.

With the increase in sales, the months supply of inventory rose to 8.6 from 7.5. The long-term inventory supply ratio has historically been around 5 months. Ratios above about 6 to 7 months are historically correlated with short term price declines. Indeed, this has been the trend over the past months. The median sale price in February fell 1.1% over the month to $156,100. This was down 5.2% from a year prior. What should be kept in mind is that the decline in price may be at least in part due to a change in the mix of houses sold, and not necessarily because home values have fallen this much. Regardless, housing market demand remains soft, and excess inventories remain prevalent.

Sales (mil. annual.)4.885.405.224.644.384.41
    M/M % Change-9.63.412.55.9-0.74.0
Med. Price (‘000s)$156.1$157.9$168.8$170.2$170.6$171.0
    Y/Y % Change-5.2-4.2-1.00.1-0.8-2.6
Months Supply8.

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