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Existing Home Sale Report for March

The March existing home sale report was released by the National Association of Realtors this morning.  It reported a further decline in existing home sales, falling 3% from February to an annual rate of 4.57mm which is 7% below March, 2008.  The median home price is now $175,200 which is 12% below last year.  Over half the transactions in March were to first time buyers taking advantage of the lowest interest rates in 40 years (5% for 30 year conventional mortgage), and the $8,000

Distressed properties accounted for over half the March transactions.  Such properties typically sell at a 20% discount to conventional properties.

As always, there were significant regional variations in the data.

Today’s Wall Street Journal published the following chart showing housing inventory by city, measured in months. 

housing inventory chart

Some comments about all this

  1. Market continues weak. 
  2. Average price is low enough to attract many new buyers.  We know from last month that the “affordability index” is the best it’s been in 40 years.  Interest rates are at 40 year lows.  And the $8,000 tax credit will increase first-time home buying interest.  Conditions are ripe for a significant turnaround once someone convincingly yells “BOTTOM!”  This may be getting close.  Though March prices are below a year ago, they are 4% higher than the previous month.
  3. Inventory out West is getting tight.  Four California cities have less than 6 months inventory, as do Denver, Houston and Dallas.  With transactions up 19% in the West, this makes sense.  Caution: affordability though low on a relative basis is still high compared with the rest of the nation.  Prices probably have more to slide.
  4. Florida, on the other hand, continues to be a mess.  Miami, Orlando and Tampa have a glut of housing to deal with.
  5. The Northeast has really declined in the past three months.  Once one of the more solid areas of the country, the financial meltdown is really showing up in recent numbers.  Boston and Washington have good inventories, but New York’s has really exploded and Philly is not far behind.  Those conditions won’t end anytime soon.


Read the related Wall Street Journal Story