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Economy in Brief

U.S. Existing Home Sales Rise With Affordability And Tax Credit
by Tom Moeller June 23, 2009

The National Association of Realtors reported that sales of existing homes homes benefited last month from continued gains in home affordability as well as an $8,000 tax credit for first-time home buyers. Sales rose 2.4% last month, the same as they did during April, to 4.77M (AR). Consensus expectations had been for April sales of 4.80M homes. Total sales include sales of condos and co-ops.

Home affordability recovered most of its April slip and rose to near its record high. The increase came despite a modest m/m gain in home prices from an April level that was revised sharply lower. Home prices remained down by one-quarter from the 2007 peak. The series dates back to 1971.

The recently enacted tax credit is for first-time home buyers of either a new or a pre-owned home. The credit of up to $8,000 extends through the rest of this year. The full details of the home-buyer tax credit can be found here

Sales of existing single-family homes alone increased 1.9% last month and they were up 4.9% from the January low. Nevertheless, sales remained near the lowest level since July 1997. (These data have a longer history than the total series).

The number of unsold homes (condos & single-family) on the market reversed roughly half of a sharp April increase with a 3.5% decline and year-to-year inventories are down 15.3%. At the current sales rate there was a 9.6 months' supply on the market which was near the lowest since 2007. For single-family homes the inventory also fell 3.3% (-15.8% y/y). At the current sales rate there was a 9.0 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.

Why has home ownership fallen among the young? from the Federal Reserve Bank of Chicago can be found here.

Existing Home Sales (Thous) May April Y/Y 2008 2007 2006
Total 4,770 4,660 -3.6% 4,893 5,674 6,516
  Northeast 800 770 -10.1 845 1,010 1,093
  Midwest 1,090 1,000 -4.4 1,130 1,331 1,494
  South 1,740 1,740 -8.9 1,860 2,243 2,577
  West 1,140 1,150 11.8 1,064 1,095 1,357
Single-Family 4,250 4,170 -3.0 4,341 4,960 5,712
Median Price, Total, $ 173,000 166,600 -16.8 197,250 216,633 222,042
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