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Economy in Brief

U.S. Existing Home Sales Jump But Prices Decline Again
by Tom Moeller October 23, 2009

Home sales continue to recover, helped by lower prices. The National Association of Realtors reported that September sales of existing homes rose sharply to the highest level since July 2007. The 9.4% m/m increase to 5.570M units (SAAR) followed a 2.9% July decline that was little revised. Moreover, the increase in September home sales outpaced Consensus expectations for a rise to 5.35M. Total sales include sales of condos and co-ops.

Sales of existing single-family homes alone similarly increased a sharp 9.4% to 4.890M last month and were up 20.7% from the January low. (These data have a longer history than the total sales series).

Recent sales have been helped by a tax credit for first-time home buyers. The credit of up to $8,000 extends though the end of this year. The full details of the home-buyer tax credit can be found here.

The median price of an existing home fell for the third straight month, to $174,900. Though prices were still lower than the year-ago level, they have risen 6.1% from the January low. The median price for a single-family home was $174,900 (-8.1% y/y). These price declines have sharply raised home affordability. During August, the composite index of home affordability reversed all of its July decline and rose 2.3%. It was up 26.5% from August of last year but down 10.1% from its January peak due to a limited decline in interest rates.

Perhaps due to lower prices, potential sellers put fewer homes on the market. The number of unsold homes (condos & single-family) for sale fell 7.5% (-15.0% y/y) during September to near the lowest level since January 2007. Year-to-year inventories were down 15.0%. At the current sales rate there was a 7.8 months' supply on the market which was near the lowest since early-2007. The latest figure was down from a high of 11.3 months early last year. For single-family homes the inventory fell 9.1% m/m (-16.7% y/y). At the current sales rate there was a 7.6 month's supply of homes on the market, the lowest since early-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.

Financial Regulation and Supervision after the Crisis: The Role of the Federal Reserve is the title of this morning's speech by Fed Chairman Ben S. Bernanke and it is available here.

Existing Home Sales (Thous, SAAR) September August Y/Y 2008 2007 2006
Total 5,570 5,090 9.2% 4,893 5,674 6,516
  Northeast 950 910 11.8 845 1,010 1,093
  Midwest 1,250 1,140 7.8 1,130 1,331 1,494
  South 2,060 1,890 10.8 1,860 2,243 2,577
  West 1,300 1,150 5.7 1,064 1,095 1,357
Single-Family 4,890 4,470 7.7 4,341 4,960 5,712
Median Price, Total, $ 174,900 177,300 -8.5 197,250 216,633 222,042
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