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Economy in Brief

February U.S. Existing Home Sales Recover January Decline as Prices Remain Weak
by Tom Moeller March 23, 2009

Sales may indeed respond to prices. That seemed the case according to the National Association of Realtors report on sales of existing homes. They rose 5.1% during February 4.72M and the increase reversed January's decline. Consensus expectations had been for February sales of 4.45M homes. Total sales include sales of condos and co-ops. In each of the country's regions sales during February roughly recovered their January declines.

Did continued weakness in pricing power spur the February recovery? Median home prices did rise 0.4% from January. The uptick followed, however, a revised 6.2% (NSA) January decline which was double the initial estimate. The recent weakness in prices left them 15.5% below February of last year and prices have fallen 28.2% since their peak. Declines in home prices and lower interest rates have gone a long way to increase the affordability of an existing home which is up roughly one quarter from one year ago. The measure rose to a record high for the series which dates back to 1971.

For existing single-family homes alone sales recovered most of their January decline with a 4.4% rise to 4.230M units. However, that remained near the lowest level since July 1997. Is the earlier decline in sales forming a bottom? They have been essentially flat for the last four months. (These data have a longer history than the total series).

The number of unsold homes (condos & single-family) on the market increased a slight 5.2% during February but the year-to-year decline of 5.5% may eventually give some lift to home prices. At the current sales rate there was a 9.7 months' supply on the market which was near the lowest since 2007. For single-family homes the inventory also rose a modest 2.6% (-6.7% y/y) after little change during January. At the current sales rate there was a 9.1 month's supply, near the lowest since 2007.

The data on existing home sales, prices and affordability can be found in Haver's USECON database. The regional price, affordability and inventory data is available in the REALTOR database.

The "fact sheet" for the Public-Private Investment Program from the U.S. Treasury Department is available here.

House Prices and Bank Loan Performance from the Federal Reserve Bank of San Francisco can be found here.

Existing Home Sales (Thous) February January February y/y % February '08 2008 2007 2006
Total 4,720 4,490 -4.6 4,950 4,893 5,674 6,516
  Northeast 740 640 -14.9 870 845 1,010 1,093
  Midwest 1,040 1,030 -14.0 1,210 1,130 1,331 1,494
  South 1,740 1,640 -11.2 1,960 1,860 2,243 2,577
  West 1,200 1,170 30.4 920 1,064 1,095 1,357
Single-Family 4,230 4,050 -3.6 4,390 4,341 4,960 5,712
Median Price, Total, $ 165,400 164,800 -15.5 195,800 197,250 216,633 222,042++
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