Sales of existing homes plunged 8.4% in March to a seasonally adjusted annual rate of 6.12 million, the lowest in nearly four years, the National Association of Realtors reported Tuesday. It was the largest percentage decline in sales since January 1989. Economists were expecting sales to fall to 6.45 million. The median price of an existing home fell 0.3% year-over-year to $217,000. The inventory of unsold homes on the market fell 1.6% to 3.75 million, representing a 7.3-month supply. Sales of condos were unchanged, while sales of single-family homes dropped 9.5%. Sales fell in all four regions. "This number reflects subprime lending" as well as the cold weather in February, said David Lereah, chief economist for the real estate group. End of Story
The decline in sales, while partly weather related, may renew concern that the housing recession will linger and put at risk the Federal Reserve's forecast for moderate economic growth. Subprime mortgage defaults are rising, and owners' reluctance to reduce prices may keep more unsold properties on the market.
``I have no reason to believe that this particularly is the low,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``A lot of forces that drove sales higher in recent years are still weakening.''
Concern about mortgage defaults helped depress consumer confidence in the U.S. to the lowest level in eight months during April, a separate private report showed.
From AFX News:
Existing home sales in the US recorded their steepest drop in 18 years in March, even as they shrank to a nearly four year low, the National Association of Realtors said.
Here's a link to the National Association of Realtors Website for the numbers
A few points.
1.) This number, well, sucks. Housing is not anywhere hear a bottom.
2.) All regions dropped. The smallest drop was 6.2% in the South. The Midwest had the largest drop of 10.9%.
3.) The total inventory available for sale increased 17.1% from year ago levels, increasing from 3,198,000 to 3,745,000. Current months available for sale inventory increased from 6.8% to 7.3%.
4.) There is further to do on the downside. While sales dropped, the median price increased from $213,600 in February to $217 in March. Seller's still haven't gotten the message that to move houses off the market they're going to have to lower prices.
5.) While weather was probably partially responsible, this drop is fundamental -- that is demand is weakening. Credit standards are tightening, consumers already have a ton of debt on their books and there are simply a ton of houses on the market to sell.