(May 27, 2009 Release)
Highlights
• Existing home sales rose 2.9 percent to 4.68 million in April. The annualized home sales in April is now 3.5 percent below its level from a year ago.
• April’s sales pace is close to its 3 month average of 4.65 million units.
• The Northeast experienced an 11.6 percent increase in sales, while the West and South experienced a 3.5 percent and 1.8 percent gain in sales, respectively. Sales in the Midwest were down 2 percent.
• It was reported that almost 45 percent of home sales were foreclosure and short sales in April.
• The median home price declined 15.4 percent from a year ago.
• The months’ supply of homes available for sale increased substantially to 10.2 compared to 9.6 in March
| Existing Home Sales (Mil, SAAR) | ||||
| April 09 | Mar 09 | 3 mo Avg | 1 year ago | |
| United States | 4.68 | 4.55 | 4.65 | 4.85 |
| % change | 2.9 | -3.4 | 3.5 | |
| Northeast | 0.77 | 0.69 | 0.74 | 0.86 |
| % change | 11.6 | -8.0 | -10.4 | |
| Midwest | 1.00 | 1.02 | 1.02 | 1.11 |
| % change | -2.0 | -1.9 | -9.9 | |
| South | 1.74 | 1.71 | 1.73 | 1.91 |
| % change | 1.8 | -1.7 | -8.9 | |
| West | 1.17 | 1.13 | 1.16 | 0.98 |
| % change | 3.5 | -4.2 | 19.4 | |
| Months’ Supply | 10.2 | 9.6 | 9.8 | 11.3 |
| Median Existing Home Prices (Ths, NSA) | ||||
| Apr 09 | Mar 09 | 3 mo Avg | 1 year ago | |
| United States | 170.2 | 169.9 | 169.4 | 201.3 |
| % change | 0.2 | 1.0 | -15.4 | |
| Northeast | 237.4 | 230.7 | 234.8 | 262.6 |
| % change | 2.9 | -2.4 | -9.6 | |
| Midwest | 138.8 | 138.7 | 135.8 | 152.2 |
| % change | 0.1 | 6.7 | -8.8 | |
| South | 148.0 | 146.9 | 146.8 | 169.7 |
| % change | 0.7 | 0.9 | -12.8 | |
| West | 222.6 | 227.4 | 226.8 | 284.7 |
| % change | -2.1 | -1.3 | -21.8 | |
Source: National Association of Realtors
Analysis
The 2.9 percent increase in existing home sales was as expected. The April sales pace was a bounce back from the decline in March home sales. The 4.68 annualized pace of sales is close to its 3 month 4.65 average, suggesting that existing home sales is drifting slightly upward from its cyclical low of 4.49 million unit pace set in January. Existing home sales seems to be going nowhere; hovering in the 4.5 to 4.9 million range over the past 12 months. This is disappointing news given that mortgage rates are near cyclical lows and mounting foreclosures are biasing the existing sales numbers upward. As expected the inventory of homes available for sale in April increased markedly to 3.968 million compared to 3.648 million in March. An increasing number of households with children usually put their homes on the market during the Spring season (as the school session nears an end). Thus, it is not surprising to observe the months’ supply jump to 10.2.
Foreclosure moratoriums impacted existing home sales in recent months by keeping properties out of foreclosure, thereby reducing the number of homes sold. With the moratoria lifted, we expect more foreclosed properties to increase inventories and generate more home sales in the months ahead which is consistent with the 2.9 percent increase in April. We believe that the government’s foreclosure mitigation programs will reduce the number of properties that go into foreclosure but not in a meaningful way. We expect about 1.9 million properties will enter foreclosure in 2009 compared with 1.7 million foreclosures in 2008.
It is possible that we have seen the worst in the housing marketplace. There is likelihood that the housing correction may be nearing its end and bottoming out. There are some positive influences for the housing sector. Mortgage rates are hovering near historic lows and are expected to remain at these levels for the remainder of the year. The fiscal stimulus package promises to have a positive impact on consumer confidence and spending patterns. And the foreclosure mitigation plan is expected to slow the pace of foreclosures, exerting downward pressure on housing supply.
However, on the down side, the economy remains in a severe recession, shedding millions of jobs on a quarterly basis. Credit conditions also remain very tight, keeping households who want to purchase homes out of the purchase marketplace. On balance, it will take time for the housing sector to recover. It is possible that January’s home sales pace represents a cyclical bottom for today’s housing recession, but the pace of home sales are expected to remain weak for the remainder of this year.
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