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Economy in Brief

Existing Home Sales
by Robert Brusca June 25, 2007

Edge lower by 0.3%- two of four regions drop.

The monthly series of existing housing sales continues to show weakness but it also shows that weakness has been diminishing. Above we plot a three-month moving average of Yr/yr growth rates. It shows that all regions except the SOUTH have put their period of biggest declines behind them. The South, with ongoing problems in the Gulf region continues to show some of the nation’s worst housing trends. Each region has experienced a rebound then another episode of weakness. The question is whether this new episode of weakness will remain muted or gather momentum. The raw monthly patterns look more like regions that are losing their weakness. The final stage of recovery for housing will be for the various regions to have some m/m increases and for growth rates to move sideways and eventually higher.

From roughly December 2005 Sept 2006 housing was in its worst period of this cycle across regions. Since then three of four regions are looking like they are trying to stabilize.

Prices have been recovering too but that is a seasonal trend. Median housing prices are down 2.1% Yr/Yr and average prices are lower by just 0.8%.

The smaller regions rebounded this month while the two larger regions continued to slow.

The progressive growth rates do not show a particular pattern except that over six months the pace of slowing was cut back or even became an increase but then turned to a larger decline in the recent three-months. Charts on the levels of variables give us better guidance on where trends are going and those actually look more stable than charts constructed from growth rates.

Moreover prices are not accelerating their drop. In the Midwest Yr/Yr median prices fell for 11 straight months and now have risen in two of the past three months. Overall median prices are still dropping and are lower in 10 straight months.

The large Southern region of the county, beset problems in the Gulf states has the largest y/y drop in existing home prices at 3.3% It has seen a 10-month string of monthly declines in Yr/Yr average and median prices. It is helping to drive the weakness in US overall prices. Even the West that remains weak has seen average prices rise Yr/Yr in half of the months dating back to June 2006. Median prices in the West are weaker having last risen Yr/Yr in Feb 2007.

The number of homes for sales actually rose last month pushing the number of months supply up to 8.9 months from 8.4 previously and from as low as 6.4 months one year ago. We do not place much stock in these figures for existing homes since by and large these are owner occupied homes and are not being sold by a business. The fact that prices are not plunging as supply increases suggests that there is a somewhat better balance in the market than what the homes-for-sale data suggest. Indeed, own-home sellers face far different market forces than builders selling empty new homes.

We are left with the feeling that regional events are getting in that way of these national comparisons. Hurricanes that battered the Gulf states and overbuilding in places like Florida and Las Vegas are having outsized impact on the data. Even so we can see that housing prices are by and large stabilizing and the while existing home sales are still declining, the pace of decline is being contained and is not accelerating.

Existing Home Sales Summary
(Existing Home Sales: In Thousands' -- Nat'n'l Ass'n of Realtors)
Month Total North-East Mid-West South West
May.07 5,990 1100 1410 2300 1180
Apr.07 6,010 1040 1400 2380 1190
Mar.07 6,150 1140 1390 2410 1210
Feb.07 6,680 1220 1560 2570 1320
Jan.07 6,440 1060 1520 2540 1320
Dec.06 6,270 1070 1460 2490 1250
Nov.06 6,250 1080 1420 2470 1280
Oct.06 6,270 1030 1420 2520 1300
Sep.06 6,230 1040 1420 2520 1260
Aug.06 6,310 1060 1430 2520 1290
Jul.06 6,320 1050 1430 2530 1320
Jun.06 6,490 1090 1490 2550 1360
May.06 6,680 1140 1510 2610 1410
Percent Changes: Existing Home Sales
Mo/Mo% Total North-East Mid-West South West
May.07 -0.3% 5.8% 0.7% -3.4% -0.8%
Apr.07 -2.3% -8.8% 0.7% -1.2% -1.7%
Mar.07 -7.9% -6.6% -10.9% -6.2% -8.3%
Feb.07 3.7% 15.1% 2.6% 1.2% 0.0%
3-Mo:ar -41.3% -39.3% -38.5% -42.0% -42.4%
6-mo:ar -8.3% 3.7% -1.4% -13.8% -15.6%
1-Year -10.3% -3.5% -6.6% -11.9% -16.3%
Prices: Median Prices
One Mo: 1.8% -0.1% 2.9% 2.3% -0.4%
One Year: -2.1% 0.5% -1.7% -3.8% -0.5%
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