Friday, May 25, 2007

Existing Home Sales Drop

From Bloomberg:

- Sales of previously owned homes in the U.S. unexpectedly fell in April to the lowest level in almost four years, dimming prospects for a quick recovery in the housing industry.

Purchases fell 2.6 percent to an annual rate of 5.99 million last month from 6.15 million in March, the National Association of Realtors said today in Washington. A measure of the supply of homes for sale rose to the highest since August 1992.

The decline comes a day after a government report showed sales of new homes surged as buyers took advantage of a slide in prices. Today's figures suggest that owners of existing homes may have to cut prices further during the prime spring selling season. The drop also reflects the impact of banks making it tougher to get subprime loans, a response to rising defaults.

``The housing market correction won't be resolved quickly,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``Downward pressure on prices will persist and sales will be sluggish for some time.''

Here's a link to the NAR report.

There are several interesting points in this report, especially compared to yesterday's report.

1.) This report is consistent with all of the earnings releases from the major homebuilders. As I noted yesterday, no homebuilder has issued a positive report. In fact most have refused to give future guidance. Considering the housing market has been dropping for about a year now, you'd think homebuilders would be shouting "reversal" from the rooftops.

2.)According to yesterday's new home sales report, the South saw a jump of 27.8% and the West saw a jump of 8.5%. Yet in today's existing home sales numbers, the south dropped 1.2% and the west dropped 1.7%. The existing home sales market in the west is 5.4 times the size of the new home sales market, while the existing home sales market in the south is 4.24 the new home market.