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Economy in Brief

U.S. Pending Home Sales Improved
by Tom Moeller October 8, 2008

The National Association of Realtors reported that during August pending sales of existing homes rose 7.4% and reversed the July decline of 2.7% which was revised slightly shallower from the initial report. The August rise compared to Consensus expectations for a 1.1% drop.

The level of sales during August was the highest since June of last year. The level also was 12.5% above the low hit this past March.

These figures are analogous to the new home sales data from the Commerce Department in that they measure existing home sales when the sales contract is signed, not at the time the sale is closed. The series dates back to 2001.

By region, a recovery in sales in the West led last month's increase with an 18.4% m/m gain bringing the level to the highest since early 2006. Sales in the Northeast also firmed and they rose 8.4%, a gain which recovered all of the prior month's drop. Sales in the Midwest rose 3.6% and they are up 14.0% from the March low. In the South sales rose 2.3%. They rose 13.2% from the March low.

The Realtors Association indicated in an earlier report that the number of homes on the market and available for sale fell a not seasonally adjusted 7.0% (-2.9% y/y). That was the first y/y decline since early 2005.

At the current sales rate there was a 10.4 months' supply of homes on the market versus an 8.9 months' average during all of last year, a 6.5 months' supply in 2006 and a 4.5 months' supply in 2005. The latest level was the lowest, however, since this past March. For single family homes the months' supply fell to 10.0, also the lowest since March but still well above the 8.7 average of last year.

The median sales price of an existing single family home fell 3.4% (-9.5% y/y) during August. Prices were down 11.3% from their peak during June of last year. For single family homes prices fell 3.4% (-9.7% y/y) and they were off 11.9% from last year's June peak.

The pending home sales data are available in Haver's PREALTOR database and the number of homes on the market and prices are in the REALTOR database.

Pending Home Sales (2001=100)  August July Y/Y 2007 2006  2005
Total 93.4  87.0    8.9% 95.7 112.1  124.3
  Northeast 79.8 73.6 2.0 85.6 98.5 108.3
  Midwest 84.5 81.6 6.6 89.6 102.0 116.4
  South 96.0 93.8 -2.0 107.3 127.3 134.8
  West 109.5 92.5 37.9 92.1 109.5 128.6
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