Existing Home Sales Continue to Muddle Along

As we enter the seasonally strong time for housing transactions it will be interesting to see if the market can make any headway this year without federal assistance programs.  I'd expect some pickup from the current moribund levels, but by end of summer I'd expect us to go back to "meh".  Housing remains a multi year wart ahead of us.... it is not even fun anymore to make fun of Lawrence Yun's always bullish predictions, like it was in 2007.   That said, he is doing his best as the chief cheerleader economist of NAR.

• Lawrence Yun, the Realtors' chief economist, cast the report in upbeat terms. “Existing home sales have risen in six of the past eight months, so we're clearly on a recovery path,” he said.

March existing home sales was more of the same - a market dominated by investors and cash buyers in distressed properties, with much of the action at the lowest price points.  Considering how low mortgage rates are versus historical levels, and how high affordability is versus historical records, it's quite telling how poor these numbers are.   That said, we're moving to my prediction of where housing prices should go in relation to incomes - we just wasted a ton of taxpayer money to stop the inevitable from happening the past few years.  [Dec 6, 2007:  Analysis - What Should Median Home Prices be Today?]   As always existing home sales are far more important than new home sales, as they make up 90%+ of the market. 

Via Bloomberg:

• A gain in sales of U.S. previously owned homes in March failed to make up for the ground lost the prior month, a sign that the housing market is taking time to recover.  Purchases increased 3.7 percent to a 5.1 million annual rate, exceeding the 5 million median forecast of economists. The median price declined from a year earlier, and 40 percent of the sales were distressed properties.
• “We continue to just tread water along the bottom,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC. “The housing market is fairly depressed. We think home prices will fall further.”
• “Home sales are strongest in the very-low price range” of less than $100,000 Lawrence Yun, chief economist at the Realtors' association, said at a news conference today in Washington.
• Of all purchases, cash transactions accounted for 35 percent, which is probably the highest share on record, Yun said. The realtors group began tracking the monthly figure in August 2008, and the share on a yearly basis before that was around 10 percent, Yun said.
• The median sales price fell 5.9 percent from March 2010 to $159,600 last month.
• The number of previously owned homes on the market rose to 3.55 million from February. At the current sales pace, it would take 8.4 months to sell those houses compared with 8.5 at the end of the prior month.
• CoreLogic Inc. last month estimated that about 1.8 million homes were delinquent or in foreclosure, a so- called “shadow inventory” set to add to the 3.5 million existing homes already on the market. 

This was a new situation I had not heard of before - I am not sure how you wrongly count home sales... it would seem when a deed changes hands, it is pretty straightforward.  But much like the government data, it appears the information on housing from the NAR is subject to ahem.... "revision".  And just as with the government it appears the revision will be downward.... of course reported much after the fact.  Circus and bread for everyone....

• One potential wild card is an upcoming revision to NAR data that could show the housing market was even weaker than believed. Some economists say the trade group's data significantly overstate the sale of used homes — by as much as 20%.  Officials at the trade group say they are reviewing the data and expect to revise their process within a few months.