(July 23, 2009 Release)
Highlights
• Existing home sales rose 3.6 percent to an annualized pace of 4.84 million in June. The annualized home sales in June is now only 0.2 percent below its pace from a year ago.
• June’s sales pace is more than slightly above its 3 month average of 4.76 million units.
• The West and South experienced a 6.4 percent and 4.0 percent increase, respectively, while the Northeast and Midwest experienced a 2.5 percent and 0.9 percent increase, respectively.
• It was reported that 31 percent of home sales were foreclosure and short sales in June, down from a 33 percent share in May.
• The median home price declined 15.4 percent from a year ago.
• The months’ supply of homes available for sale declined to 9.4 compared to 9.8 in May.
| Existing Home Sales (Mil, SAAR) | ||||
| June 09 | May 09 | 3 mo Avg | 1 year ago | |
| United States | 4.89 | 4.72 | 4.76 | 4.90 |
| % change | 3.6 | 1.3 | -0.2 | |
| Northeast | 0.82 | 0.80 | 0.80 | 0.86 |
| % change | 2.5 | 3.9 | -4.6 | |
| Midwest | 1.10 | 1.09 | 1.06 | 1.12 |
| % change | 0.9 | 9.0 | -1.8 | |
| South | 1.81 | 1.74 | 1.76 | 1.88 |
| % change | 4.0 | 0.0 | -3.7 | |
| West | 1.16 | 1.09 | 1.13 | 1.04 |
| % change | 6.4 | -5.2 | 11.5 | |
| Months’ Supply | 9.4 | 9.8 | 9.8 | 11.0 |
| Median Existing Home Prices (Ths, NSA) | ||||
| June 09 | May 09 | 3 mo Avg | 1 year ago | |
| United States | 181.8 | 174.7 | 174.4 | 215.0 |
| % change | 4.1 | 4.9 | -15.4 | |
| Northeast | 249.4 | 244.3 | 243.7 | 264.9 |
| % change | 2.1 | 2.8 | -5.9 | |
| Midwest | 157.0 | 147.1 | 147.6 | 172.8 |
| % change | 6.7 | 6.0 | -9.1 | |
| South | 163.2 | 157.5 | 156.2 | 185.3 |
| % change | 3.6 | 6.5 | -11.9 | |
| West | 214.8 | 207.0 | 208.7 | 286.0 |
| % change | 3.8 | 1.4 | -24.9 | |
Source: National Association of Realtors
Analysis
Existing home sales rose for the third consecutive month to an annualized pace of 4.89 million units. The June sales pace was predicted by a relatively strong pending home sales report in the prior month. The 4.89 annualized pace of sales is now above its 3 month of 4.76 average, suggesting that existing home sales is steadily drifting upward from its cyclical low of 4.49 million unit pace set in January. However, from a longer term perspective, existing home sales continues to hover in the 4.5 to 4.9 million unit range over the past 12 months. This is disappointing news given that mortgage rates are near cyclical lows and mounting foreclosures are biasing the existing sales numbers upward. Foreclosure sales made up 31 percent of total existing home sales for June. It is also clear that there continues to be a meaningful number of appraisal valuations that differ from contract prices which are forcing lenders to deny mortgage applications. These is contributing to a historically high fallout ratio from pending contracts to closings.
Unexpectedly, the inventory of homes available for sale in June dropped to 3.823 million compared to 3.937 million in April. An increasing number of households with children usually put their homes on the market during the Spring season (as the school session nears an end) so it is surprising to observe the inventory of homes for sale decline in June. Because of this drop, the months supply fell to 9.4.
It is possible that we have seen the worst in the housing marketplace. There is likelihood that the housing correction may be nearing its end and bottoming out. There are some positive influences for the housing sector. Mortgage rates are hovering near historic lows and are expected to remain at these levels for the remainder of the year. The fiscal stimulus package promises to have a positive impact on consumer confidence and spending patterns. And the foreclosure mitigation programs are expected to slow the pace of foreclosures, exerting downward pressure on housing supply.
However, on the down side, the economy remains in a recession, shedding a meaningful number of jobs on a monthly basis. Credit conditions also remain tight, keeping households who want to purchase homes out of the purchase marketplace. And home values continue to fall as evidenced by the 15.4 percent drop in the median home price, year over year. On balance, it will take time for the housing sector to recover. It is possible that January’s home sales pace represents a cyclical bottom for today’s housing recession, but the pace of home sales are expected to remain weak for the remainder of this year.
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