Existing home sales get back on track with a 3.7% increase to 5.10 million; supply is 8.4 months

Source: Calculated Risk

The news is this: existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7% to a seasonally adjusted annual rate of 5.10 million in March, from an upwardly revised 4.92 million in February. The rate is 6.3% below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit. That's practically flat with consensus expectations among economists, although a slight beat. The National Association of Realtors spins the data point as one in a series of six out of eight positive months on the "path of recovery." Just as the jobs "hole" is a deep one, and a 200,000 per month employment number gets us whole in more years than we'd care to think, the excess supply "hole" is also deep. If the existing home sales pace picks up a bit, the 2 million-plus excess homes in the pipeline will get absorbed at a more tolerable rate. Right now, the industry's 800-lb. gorilla is loan-to-value. You could say, "it's the down payment, stupid." Rightfully, Calculated Risk's Bill McBride asks us to focus on the months' supply number, which is impacted by seasonal inventory trends (now heading toward their annual peak). McBride writes, "Months of supply decreased to 8.4 months in March, down from 8.5 months in February. The months of supply will probably increase over the next few months as inventory increases. This is higher than normal."

Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7 percent to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3 percent below the 5.44 million pace in March 2010.
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All-cash sales were at a record market share of 35 percent in March, up from 33 percent in February; they were 27 percent in March 2010. Investors accounted for 22 percent of sales activity in March, up from 19 percent in February; they were 19 percent in March 2010.
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Total housing inventory at the end of March rose 1.5 percent to 3.55 million existing homes available for sale, which represents an 8.4-month supply4 at the current sales pace, compared with a 8.5-month supply in February.

URL to original article: http://www.builderonline.com/builder-pulse/existing-home-sales-get-back-on-track-with-a-37-increase-to-510-million-supply-is-84-months.aspx?cid=NWBD110420002

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