(April 23, 2009 Release)
Highlights
• Existing home sales fell 3.0 percent to 4.57 million in March. The annualized home sales in March is now 7 percent below its level from a year ago.
• March’s sales level is close to its 3 month average of 4.59 million units.
• The Northeast experienced an 8 percent drop in sales, while the West and South experienced a 4.2 percent and 1.7 percent loss in sales, respectively. Sales in the Midwest were flat.
• It was reported that almost 50 percent of home sales were foreclosure and short sales.
• The median home price declined 12.2 percent from a year ago, compared with a 15.5 percent year over year decline in February.
• The months’ supply of homes available for sale increased slightly to 9.8 compared to 9.7 in February.
| Existing Home Sales (Mil, SAAR) | ||||
| Mar 09 | Feb 09 | 3 mo Avg | 1 year ago | |
| United States | 4.57 | 4.71 | 4.59 | 4.92 |
| % change | -3.0 | 4.9 | -1.1 | |
| Northeast | 0.69 | 0.75 | 0.69 | 0.89 |
| % change | -8.0 | 17.2 | -1.8 | |
| Midwest | 1.04 | 1.04 | 1.04 | 1.17 |
| % change | 0.0 | 1.0 | -0.6 | |
| South | 1.71 | 1.74 | 1.70 | 1.92 |
| % change | -1.7 | 6.1 | -0.5 | |
| West | 1.13 | 1.18 | 1.16 | 0.95 |
| % change | -4.2 | 0.9 | -2.0 | |
| Months’ Supply | 9.8 | 9.7 | 9.7 | 10.0 |
| Median Existing Home Prices (Ths, SA) | ||||
| Mar 09 | Feb 09 | 3 mo Avg | 1 year ago | |
| United States | 179.6 | 176.6 | 176.3 | 200.1 |
| % change | 1.7 | 2.2 | 0.4 | |
| Northeast | 232.4 | 243.9 | 238.6 | 284.0 |
| % change | -4.7 | 2.2 | -1.5 | |
| Midwest | 147.8 | 140.9 | 142.3 | 150.4 |
| % change | 5.0 | 2.0 | 1.1 | |
| South | 150.2 | 150.7 | 150.5 | 167.4 |
| % change | -0.3 | 0.0 | -1.4 | |
| West | 258.5 | 236.2 | 239.5 | 283.9 |
| % change | 9.4 | 5.6 | 3.9 | |
Source: National Association of Realtors
Analysis
The 3 percent decline in existing home sales was greater than anticipated. However, the 4.57 annualized pace of sales is close to its 3 month and 6 month averages (4.59 and 4.66, respectively), suggesting that existing home sales may be scraping bottom. The cyclical low for home sales was a 4.49 million unit pace set in January. TWith home sales stablizing over the past 6 months and home price depreciation slowing, it is likely that housing inventories are stabilizing.
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. 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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