Existing Home Sales
Existing home sales were down a surprising 7.1 percent in February to a 5.080 million annualized rate. This rate was much lower than expected and well below economists’ low predictions of 5.200 million; it is the second lowest rate since February of last year. The report showed single-family sales down 7.2 percent at 4.510 million, and condos down 6.6 percent at 570,000. All regions within the U.S. show declines within the month. The median price is down 1.4 percent to $210,800 for the lowest reading since February of last year. Year-on-year the median is up 4.4 percent which is above the year-on-year sales rate of plus 2.2 percent, creating an imbalance that hints at further price reductions ahead.. One factor holding down sales and which reflects the low price levels is the lack of available homes on the market, which moved 3.3 percent higher in the month to 1.880 million, but is still down 1.1 percent compared to last year. Supply relative to sales, given the drop in sales and rise in supply, rose to 4.4 months from 4.0 months. This supply relative to sales number is still low especially when compared to the 4.6 months number this time last year.
FHFA House Price Index
Home prices picked up in January based on FHFA’s index which rose 0.5 percent in the month after declining going into the year-end of 2015. The year-on-year rate is at 6.0 percent for one of the best readings in the last couple of years. Given weakness in wage growth, home price appreciation is more important than ever for household wealth.
MBA Mortgage Applications
Purchase application for home mortgages fell back by 1 percent in the week of March 18th, bringing down the year-on-year increase, to a still strong 25 percent. Refinancing applications continued the decline of recent weeks dropping 5 percent in the latest week. Overall total mortgage application volume decreased by 3.3 percent. This is all despite the 1 basis point drop to 3.93 percent in the average rate for 30-year conforming loans.
New Home Sales
A surge of strength in the West supported an expected 2.0 percent rise in February new home sales to an annualized rate of 512,000, above economists’ predictions of a 510,000 rate. The west is a key region for the new home market, sales in the west jumped 39 percent in the month of February reversing January’s 33% decline. The median price jumped a monthly 6.2 percent to $301,400 but this number is still short of September’s record of $307,600. Lack of supply remains a problem for both existing home sales and new home sales. Supply in new home sales is being held down by a topping out in permits and by supply constraints in the construction sector including labor. Supply did increase 4,000 to a 7 year high of 240,000 units, but supply relative to sales remains unchanged at 5.6 months. This report which includes the gain for prices is a plus for housing. The housing sector that has opened the year on a soft note, struggling to hold above a 500,000 annualized pace over the past year.