Existing Home Sales Fall Slightly but Remain at a High Level
Existing-home sales fell 3.7 percent in February but were still 5.4 percent above year-ago levels. Sales for February came in at a seasonally-adjusted annual rate of 5.48 million, down from 5.69 million in January. The February pace is well above the post-recession low of 3.45 million in 2010, but well below the housing-bubble peak of 7.26 million in 2005.
Among the components, single-family units accounted for just under 90 percent of home sales in February with condos and coops accounting for the remaining 10 percent. Single-family sales came in at a 4.89 million pace, down 3.0 percent from January but still 5.8 percent above year-ago levels. Regionally, single-family existing home sales were up 2.5 percent from the prior month in the south – the largest region – while sales fell 13.4 percent in the northeast, 7.4 percent in the midwest, and 1.8 percent in the west. The inventory of existing homes for sale rose by 2.0 percent in February to 1.54 million, pushing the months’ supply (inventory divided by selling rate) to 3.8 months. Historically, a months’ supply below 5 is considered low.
Among condos and coops, existing sales fell 9.2 percent in February and are 1.7 percent above year-ago levels. Regionally, sales were unchanged for February in the midwest while the northeast, south and west all had monthly declines. The inventory of existing condos and coops for sale jumped 20.9 percent in February, leading to a 31.3 percent surge in the months’ supply, from 3.2 months in January to 4.2 months in February.
Housing overall remains a modest positive for the economy, having contributed to real GDP growth in the fourth quarter of 2016 following two negative quarters previously. Support for housing comes from the relatively strong labor market and high levels of consumer confidence. However, rising interest rates could become more of a headwind over time, though the slow pace of increase and historically still-low level should lessen the risk of a collapse. Data on new home sales will be released on Thursday, March 23.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
