The US existing home sales rose by 2.9% in February to 5.03mln annualized units, which has been the first increase since last year February (chart 1). Nevertheless they plunged by 23.8% from the February 2007.
In February single-family sales soared for the second consecutive month. They rose by 2.8% over month. At the same time multifamily sales edged up by 3.7% m/m (table 1). However, single-family home sales slumped by 22.9% over year, which has been the lowest rate since July 1982.
Existing home sales fell in all regions. The worst performer is the Midwest region where sales declined by 3.1% on a monthly basis. It favored 7.1% y/y slippage of the sales in this region. Home sales dropped down by 2% m/m and 1.4% m/m in the West and Northeast, accordingly.
In February inventory levels slightly adjusted, as the months’ supply of all existing homes sank to 9.6 from 10.2 in a prior month (chart 2). The months’ supply of single-family homes tumbled to 9.2, while this index edged up by 1.2 points to 13 and hit new cycle high.
The mean sales price of existing homes has been 7% lower in February compared with the same period of 2007. Single family homes prices dropped by 7.5% over year, after falling 5.2% in January. Despite the crisis in the real estate market multifamily prices fell less than the latter (2.7% y/y).
Due to extremely weak home sales data builders are cutting prices and reducing construction. Besides, rapid growth of inventories ensures significant downward pressure on house prices. Mortgages rates, which climbed sharply during the first quarter of this year could have additional pressure on housing market.
We think that further downturn of home prices will sharply decelerate personal expenditure growth in the coming quarters, as long as the rise of real estate prices has been the main driver of the consumers spending during the last years.
US ECONOMIC INDICATORS
Table 1
|
Mln. units, annualized
|
2008
|
|
Feb
|
Jan
|
Dec
|
|
Existing home sales
|
5.03
|
4.89
|
4.91
|
|
Single family
|
|
|
Existing home sale
|
4.47
|
4.35
|
4.32
|
|
Months’ supply (months)
|
9.2
|
10.0
|
9.4
|
|
Average price (000’ USD)
|
241
|
244
|
253
|
|
Multifamily
|
|
|
Existing home sale
|
0.56
|
0.54
|
0.59
|
|
Months’ supply (months)
|
13.0
|
11.8
|
11.9
|
|
Average price (000’ USD)
|
252
|
259
|
262
|
Source: Bloomberg, National Association of Realtors
Chart 1
Source: Bloomberg
Chart 2
Source: Bloomberg
