Existing Home Sales: Another Sign Of A Thaw?

There was some moderately good news with existing home sales. Though the market is still soft, the February report reversed the decline that was seen in January.

From the NAR:

Existing-home sales increased in February, reversing losses in January. Even so, sales activity remains relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.1 percent to a seasonally adjusted annual rate1 of 4.72 million units in February from a pace of 4.49 million units in January, but are 4.6 percent below the 4.95 million-unit level in February 2008. Seasonal adjustment factors are more volatile in winter months, but sales rates over the past few months show dampened sales activity.

Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”

The national median existing-home price2for all housing types was $165,400 in February, down 15.5 percent from a year ago when the median was $195,800 and conditions were close to normal; the median is where half of the homes sold for more and half sold for less. “Given the downward distortion in price comparisons due to distressed sales, it’s important for owners to keep in mind that this doesn’t equate to a similar loss of value for traditional homes in good condition,” Yun explained.

For a complete analysis of the results I recommend as usual that you check out Calculated Risk. Here and here are the relevant links.

This is one more data set that showed a change in trend. Over the past couple of weeks a number of indicators have either turned positive or indicated a change in the rate of decline. Taken together they could well be indicative of some positive developments. If the Geithner plan as well as other initiatives inject some general confidence into consumers then we might well be looking at the beginnings of a turn around.

I foolishly stick to my call of a rebound in the second half. Though I may be grasping at straws at least there are a few out there for me to get my mitts on.

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