DAILY ECONOMIC DATA

Existing Home Sales increased 5.1% in February

Existing home sales increased 5.1% in February to an annual rate of 4.72 million. The consensus expected a slight decline to a sales rate of 4.45 million.

Existing home sales are down 4.6% versus a year ago.

Sales were up in all major regions of the country and increased for both single-family units and condos/co-ops.

The median price of an existing home increased to $165,400 in February (not seasonally adjusted) but is down 15.5% versus a year ago.

The months’ supply of existing homes (at the current sales rate) was unchanged at 9.7 in February. A faster sales pace was offset by more homes in inventory, the first increase in the number of existing homes for sale since July.

Implications: The housing market is not going to fully heal until three different indicators hit bottom: sales, building activity, and prices. Today’s report on existing home sales signals that sales have likely bottomed already. The number of existing homes sold increased 5.1% in February. In addition, the number of homes for sale increased for the first time since July. This is consistent with marginal sellers, previously too scared to even dip their toes in the housing market, now sensing an imminent turn in the market, particularly in metropolitan environments where many of the price declines have been the strongest. Most of the increase in inventory in February is attributable to condos/coops. Although the median home price is down 15.5% versus last year, this is a smaller year-ago drop than last month (when it was -17.5%). In terms of the other housing indicators, we expect home building to bottom late this year and prices to bottom a few months later. However, it is also important to recognize that much of the remaining pain in the housing market will be concentrated in five states: California, Florida, Arizona, Nevada, and Michigan. We expect many areas of the country to experience greater building activity and prices by mid-year.