Sales of Existing Homes Appear to be Stabilizing at a Low Level
Sales of all existing homes dropped 3.0% at an annual rate of 4.57 million units in March. Sales of existing single-family homes declined 2.8% to an annual rate of 4.10 million units in March. Sales of single-family existing homes have moved in a narrow range of 4.06 million – 4.25 million in last five months, suggesting that a bottom at a low level is being established. The Beige Book, prepared for the April 28-29 FOMC meeting, noted that there were “some signs that conditions may be stabilizing.”
Regionally, sales of single-family existing homes fell in the Northeast (-7.1%), South (-1.9%), and West (-4.6%) but held steady in the Midwest. On a year-to-year basis, sales of single-family existing homes fell 2.7% in March. The good news is that sales are falling but at a significantly slower pace than what occurred in most of 2008 (see chart 2) and the March decline is the smallest in the first three months of the year (January: -6.00%, February: -9.4%).
The median price of an existing single-family home rose 4.2% to $174,900, the second monthly increase. But these data are seasonally unadjusted. On a year-to-year basis, the median price of an existing single-family home declined 11.5% in March, following a nearly 17% drop in January, which is probably the trough for the year-to-year change in the median price of an existing single-family home (see chart 3).
The seasonally adjusted inventory-sales ratio for existing single-family homes rose slightly to a 9.6-month supply mark in March from a 9.5-month supply in the earlier month. This ratio appears to have peaked in November 2008 (11.3 month supply) and has since moved in a narrow range between 9.96 months and 9.53 months (see chart 4).
Initial Jobless Claims Erase Part of the Improvement Seen in Recent Weeks
Initial jobless claims moved up 27,000 to 640,000 in the week ended April 18 and erased a part of the decline seen in the prior two weeks.
Continuing claims, which lag initial claims by one week, advanced 93,000 to 6.137 million, a new record. The insured unemployment rate rose to 4.6% from 4.5% in the previous week. The insured unemployment rate has risen one percentage point in a short span of 10 weeks which has occurred only on two other occasions (chart 6). The jobless claims report presents a serious challenge to policymakers.
