| Businessweek | - |
Previously
owned U.S. home sales unexpectedly dropped in March as a lean supply of
properties kept the industry from generating a stronger recovery.
Historically
low mortgage rates, rising property values and employment gains have
helped mend the U.S. housing market, a source of strength for the
world’s largest economy a boost. Photographer: Patrick T.
Fallon/Bloomberg
Bloomberg News
Sales of Existing U.S. Homes Fall on Limited Inventory: Economy
April 22, 2013
Related
Previously
owned U.S. home sales unexpectedly dropped in March as a lean supply of
properties kept the industry from generating a stronger recovery.
Purchases
(ETSLTOTL) of existing houses, tabulated when a contract closes, fell
0.6 percent to a 4.92 million annual rate, figures from the National
Association of Realtors showed today in Washington. The median forecast
of 75 economists surveyed by Bloomberg projected sales would increase to
a 5 million rate. A decline in the availability of distressed homes and still-tight access to credit are holding back buyers, impeding progress in a real-estate market that’s been a source of strength for the economy. Bigger gains may emerge when rising property values encourage more Americans to put their properties on the market.
“Despite some little turbulence, the residential housing market is still improving,” said Christophe Barraud, an economist at Market Securities-Kyte Group in Paris, who correctly forecast the rate of purchases. “We’re in a transition mode where distressed sales are falling and conventional sales are growing, which means stagnation in total home sales. This situation is not problematic because it shows the market is returning to normal.”
Distressed properties consist of foreclosures and short sales.
The median price of an existing home rose 11.8 percent, the most since November 2005, to $184,300 last month from $164,800 in March 2012. The gain reflected an increase in the share of sales of higher-priced dwellings compared with less-expensive properties.
Stocks Fall
Stocks fell after the report and as investors weighed corporate earnings. The Standard & Poor’s 500 Index declined 0.2 percent to 1,558.27 at 1:03 p.m. in New York.Elsewhere, Spain’s budget deficit was the largest in the European Union last year, underscoring the challenge faced by Prime Minister Mariano Rajoy as he prepares a plan to foster an economic recovery. Eurostat, the EU’s statistics agency in Luxembourg, today reported that Spain’s 2012 deficit widened to 10.6 percent of gross domestic product, swollen by the cost of bailing out its banking system. That’s up from 9.4 percent in 2011 and is worse than Greece’s gap of 10 percent.
Estimates for U.S. existing-home sales in the Bloomberg survey ranged from 4.9 million to 5.2 million. The prior month’s pace was revised to 4.95 million from a previously reported 4.98 million.
The number of previously owned homes on the market fell to 1.93 million in March from 2.32 million a year earlier. At the current sales pace, it would take 4.7 months to sell those houses compared with 4.6 months at the end of February.
Home Supply
The months’ supply figure may increase in April, when more Americans typically put their properties up for sale. Even so, it will likely be below the six-months’ supply that is typical, according to Lawrence Yun, NAR chief economist.The supply of homes is “plentiful on the upper end of prices,” Yun said at a news conference today as the figures were released. “There’s very little inventory on the lower end.”
The rebound in housing is spilling over into other parts of the economy, benefiting companies such as Martinsville, Virginia-based furniture maker Hooker Furniture Corp. (HOFT)
“We’re encouraged by the sustained improvement in housing sales, new-home construction, rising housing prices, reduced inventories, historically low mortgage rates, and the best housing affordability in years, all of which combined to create a positive environment for our company and our industry,” Paul Toms, chief executive officer of Hooker Furniture, said on an April 15 earnings call.
Existing-home purchases are recovering from a 13-year low of 4.11 million in 2008. Annual sales peaked at 7.08 million in 2005. A total of 4.66 million previously-owned houses were sold in 2012.
Distressed Properties
Purchases of distressed properties accounted for 21 percent of the total, the least since NAR started collecting the data in October 2008. Of all purchases, cash transactions accounted for about 30 percent.First-time buyers made up 30 percent of the total, the same as in February. Yun said “first-time buyers are struggling to get into the market,” where cheaper properties are in shorter supply.
The supply of homes priced at $100,000 or less fell to 4.5 months in March from 4.7 in the same period last year, the NAR said.
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