Existing Home Sales Rise Less than Expected

Existing Home Sales measures the change of existing residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a strong indicator of overall economic strength. The Survey states that 4.59 million existing residential buildings were sold in February, however, this is lower than the 4.61 million expected by analysts. This is essentially bearish for the U.S. housing market. February existing-home sales declined from an upwardly revised January pace but are well above a year ago, while the median price posted a slight gain, according to the National Association of Realtors. Sales were up in the Midwest and South, offset by declines in the Northeast and West. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 0.9 percent to a seasonally adjusted annual rate of 4.59 million in February from an upwardly revised 4.63 million in January, but are 8.8 percent higher than the 4.22 million-unit level in February 2011. Lawrence Yun, NAR chief economist, said underlying factors are much better compared to one year ago. “The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” he said. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy.” An increase in existing homes sold implies a healthy housing market, and because of the multiplier effect, housing has an impact on the rest of the economy. Increases in homes sold suggest increased household income and in turn an economic expansion, and visa versa. The

is the national association representing the real estate finance industry which compiles this information.