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Economy in Brief

U.S. Existing Home Sales Improve With Tax Credit Expiration
by Tom MoellerMay 24, 2010

Hopefully, recent improvement in existing single-family home sales wasn't all due to buying ahead of the April 30th expiration of a Federal home-buyer tax credit. Existing home sales rose 7.6% last month to 5.770M (AR) according to the National Association of Realtors. The gain followed a similar rise in March which followed declines during the prior thee months. Sales in April exceeded Consensus expectations for 5.65M. Total sales include sales of condos and co-ops. Sales of existing single-family homes alone rose 7.4% from March to 5.050M. (These data have a longer history than the total sales series). Sales of condos and co-ops rose 42.3% from last year.

Sales have been helped by a tax credit for first-time home buyers. Additionally, a credit of up to $6,500 was available to some existing home owners who move. The full details of the home-buyer tax credit can be found here.

The median price of all existing homes also rose in April to $173,100 but remained off roughly 25% from the 2007 peak. The price of a single-family home rose 2.3% to $173,400 (4.5% y/y). Earlier price weakness sharply raised home affordability -- by three-quarters from the 2006 low. The median family income for existing home buyers was $60,498 and mortgage payments amounted to 14.7% of that total.

The number of unsold homes (single-family & co-ops) for sale rose sharply m/m, up 2.7% y/y. At the current sales rate there was an 8.4 months' supply of homes on the market. That was down from a high of 10.1 months during April of 2008. For single-family homes, the inventory rose m/m to an 8.2 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) April March February April y/y 2009 2008 2007
Total 5,770 5,360 5,010 22.8% 5,160 4,893 5,674
  Northeast 1,090 900 840 41.6 863 845 1,010
  Midwest 1,330 1.210 1,110 29.1 1,166 1,130 1,331
  South 2,140 1,970 1,840 23.0 1,913 1,860 2,243
  West 1,210 1,290 1,220 5.2 1,216 1,064 1,095
Single-Family Sales 5,050 4,700 4,360 20.5 4,573 4,341 4,960
Median Price, Total, $ (NSA) 173,100 169,600 164,600 4.0 172,742 197,233 216,633
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