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Economy in Brief

U.S. Existing Home Sales Plummet As Prices Fall Sharply
by Tom Moeller February 26, 2010

The National Association of Realtors reported that January sales of existing homes fell another 7.2% to 5.050M units (SAAR) after a little-revised 16.2% December decline. The decline may have been again influenced by the timing of a recently-extended home-buyer tax credit. The fall in January home sales greatly exceeded Consensus expectations for a decline to 5.90M.

The home-buyer tax credit of up to $8,000 now runs though April 30. Additionally, a new credit of up to $6,500 is available to some existing home owners who move. The full details of the home-buyer tax credit can be found here.

Sales of single-family homes fell 6.9% but they remained up 8.6% y/y as home affordability improved with lower prices and low interest rates. Sales of condos and co-ops alone fell 8.1% from December to 620,000 but were up by one-third from twelve months ago.

The median price of all existing homes fell 3.4% last month after a much-reduced 0.3% December rise. The latest level equaled that of 12 months ago and these were the lowest since May 2002. Some comfort may be taken from the unchanged level of prices versus one year ago versus the 2.4%-to-12.4% declines during the last three years. These declines have raised the affordability of a home to near its record high although the rate of increase has slowed sharply.

The number of unsold homes (single-family & co-ops) fell 0.5% in January (-9.6% y/y) to the lowest level since March 2006. At the current sales rate there was a slightly-increased 7.8 months' supply of homes on the market, near the lowest since late 2006. The latest figure was down from a high of 11.3 months during April of 2008. For single-family homes, the inventory rose to a 7.6 months' supply. 

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.

Existing Home Sales (Thous, SAAR) January December November Y/Y 2009 2008 2007
Total 5,050 5,440 6,590 11.5% 5,160 4,893 5,675
  Northeast 820 920 1,150 -22.4 863 847 1,009
  Midwest 1,080 1,160 1,540 8.0 1,166 1,125 1,329
  South 1,870 2,020 2,380 -12.0 1,913 1,858 2,244
  West 1,280 1,350 1,420 7.6 1,216 1,063 1,093
Single-Family 4,430 4,760 5,710 8.6 4,567 4,338 4,959
Median Price, Total, $ (NSA) 164,700 170,500 170,000 0.0 172,742 197,233 216,633
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