US Existing home sales: Still off to a strong start despite February decline - Wells Fargo

Today’s US Existing homes sales showed a decline of 3.7% in February to a 5.48 million pace. According to analysts from Wells Fargo, home sales are now more in line with pending sales, which had fallen in recent months. They point out that inventories rose slightly but remain unusually lean.

Key Quotes: 

“Existing home sales slipped 3.7 percent in February but are still off to a strong start to the year. The decline was somewhat expected following January’s surprisingly strong 3.3 percent increase but February’s report did come in slightly below the consensus estimate and our own lower call.”

“We were expecting sales to come in below consensus, largely due to recent declines in pending home sales, which are contracts for the purchase of an existing home. Pending sales do a reasonably good job of anticipating the future direction of existing home sales but tend to overstate the magnitude of swings, particularly when you get a big down month like we did in January, when pending home sales tumbled 2.8 percent.”

“We do not expect existing home sales to precisely follow pending sales lower, just as they did not precisely follow them higher when pending sales spiked early last year. 

“February’s dip in home sales allowed inventories to rebound somewhat. For-sale inventories rose 4.2 percent to 1.75 million homes.”

“The median price of an existing home rose 7.7 percent over the past year.”