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US: Update Existing home sales

Mon, Jan 25 2010, 19:39 GMT
by BBVA Bancomer Team

BBVA Bancomer  |  View company's profile

Existing home sales dropped 16.7% to 5.45M in December, representing a downward adjustment following the passing of the original November 31st end date of the tax credit for first-time home buyers. While sales dropped compared to the previous month’s figures, November’s home sales were likely elevated as home buyers tried to close the deals prior to the tax credit’s expiration. December’s sales still illustrate recovery in the sector by coming in 15.0% above those of the previous year.

Sales declined across all regions. The steepest drop was 25.8% to 1.15M in the Midwest, followed by 19.5% to 0.91M in the Northeast, 16.3% to 2.01M in the South and 4.8% to 1.38M in the West.

The report also illustrated stabilization in home prices as the average home price rose 6.4% to $225.4K, which is 3.6% above December 2008 prices. Inventories continued to decline for the fifth consecutive month to 3.3M, but the slow is sales caused the month’s supply (the number of months required to liquidate the existing inventories at the current sales pace) to 7.2 months.

Bottom-line: Today’s existing home sales report is not indicative of a the beginning of a downward trend in home sales, but it does infer that sales in the previous 2-3 months were most likely boosted by the anticipated expiration of the tax credit. The current environment of low prices and favorable borrowing costs will continue to attract buyers to the market. Nevertheless, the weak employment situation will continue to weigh on home sales, leading us to expect a slow recovery.

Published on  Mon, Jan 25 2010, 19:40 GMT

US: Update Existing Home Sales

Mon, Oct 26 2009, 10:13 GMT
by BBVA Bancomer Team

BBVA Bancomer  |  View company's profile

Existing home sales rose to 5.57M in September from 5.09M in August. Much of the increase was attributed to first-time home buyers scrambling to take advantage of the tax credit before it expires on November 30th according to the National Association of Realtors. Sales have risen for five of the previous six months and are now 5.8% above those of September 2008.

Home sales rose across all regions. The largest increase was in the South to 2.06M from 1.89M, followed by the West (1.3M from 1.15M), Midwest (1.25M from 1.14M) and Northeast (0.95M from 0.91M).

The average home price dropped 1.2% to $219.8K, but the year-over-year change eased to -6.5% from -9.4%. On the other hand, the boost in sales helped to bring down inventories, which dropped to 3.63M from 3.92M, and the month’s supply, which fell to 7.8 from 9.3 months. Nevertheless, these two measures remain elevated.

Bottom-line: Sales of existing homes have strengthened significantly over the past six months, which have help to slightly lower inventories, stabilize prices and increase builders’ confidence. While the market remains weak, conditions will continue to be favorable to buyers as high inventories and ongoing foreclosures will keep prices low.

Published on  Mon, Oct 26 2009, 10:13 GMT

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