The housing sector may be suffering another setback, at least based on the February report for existing home sales which fell nearly 10 percent to a lower-than-expected annual rate of 4.88 million. Year-on-year, sales are down 2.8 percent. Declines are evenly split between single-family homes and condos and are also evenly split across regions.
The bad news continues: supply is up and prices are down. Supply rose 3.5 percent to 3.488 million homes in what is 8.6 months of supply at the current sales rate, up from 7.5 months in January and even above year-ago February supply of 8.4 months. The median price fell 1.1 percent February to $156,100 with the average price down 1.4 percent to $203,000. Year-on-year, the decline for the median price is deepening, at minus 5.2 percent, but is steady for the average price at minus 2.7 percent.
Distressed sales made up a very heavy 39 percent of all transactions with cash transactions at 33 percent, a very heavy proportion pointing to bottom fishing by investors but also reflecting still tough credit conditions for ordinary home buyers. The economy, unlike other cycles, has been able to recover nicely even without the housing sector. New home sales data will be posted on Wednesday.
Market Consensus before announcement
Existing home sales rose 2.7 percent in January to a higher-than-expected annual rate of 5.36 million units. But the median price fell sharply in the month to a nine-year low, down 5.9 percent to $158,000 for deepening year-on-year contraction of 3.7 percent. Distressed sales accounted for a heavy 37 percent share of total sales, pointing to why prices were so weak. A positive in the existing homes report was a decline in supply to 7.6 months at the current sales rate from 8.2 months in December.