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Existing Home Sales Hit 5.77 Million As Homebuyer Tax Credit Expires, Housing Inventory Highest Since July 2009

Tyler Durden's picture




 

The NAR reported April existing home sales which came in at 5.77 million units, which was a 7.6% improvement from March, and 22.8% higher than last April, primarily as a result of a last minute rush to buy before the expiration of the homebuyer tax credit. The increase was driven primarily by a spike in Northeast sales which increased from 900k to 1,090k or a 21.1% bounce. This was offset by a decline in West existing home sales of -6.2% (both on a SAAR basis). Yet the most relevant data item was that Inventory increased by 11.5% from March to 4,044,000, the highest number since July 2009's 4,062,000. The April 2010 number represented 8.4 months of supply. As can be seen on the charts below, both of these metrics indicate that even as houses sell, and average and median prices grow, the over and shadow supply keeps surging. For all those who bought houses in March at a US average price of $218,300 in April, waiting a few more months may have been a tad more prudent approach.

Below is home inventory in total units and months supply:

As for the reason for the increase in existing home sales, even the NAR attributed that primarily to the ongoing tax-credit.

Buyers responding to the homebuyer tax credit and favorable
affordability conditions boosted existing-home sales in March, marking
the beginning of an expected spring surge, according to the National
Association of Realtors.

Existing-home sales,
which are completed transactions that include single-family, townhomes,
condominiums and co-ops, rose 6.8 percent to a seasonally adjusted
annual rate of 5.35 million units in March from 5.01 million in
February, and are 16.1 percent above the 4.61 million-unit level in
March 2009.

Lawrence Yun,
NAR chief economist, said it is encouraging to see a broad home sales
recovery in nearly every part of the country, with two important
underlying trends. “Sales have been above year-ago levels for nine
straight months, and inventory has trended down from year-ago levels
for 20 months running,” he said. “The home buyer tax credit has been a
resounding success as these underlying trends point to a broad
stabilization in home prices. This is preserving perhaps $1 trillion in
largely middle class housing wealth that may have been wiped out
without the housing stimulus measure.”

Keep in mind the tax credit is now over. Expect a material decline in both existing and new home sales (as already seen by declining permits) in the next few months.

 

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Mon, 05/24/2010 - 10:33 | 369952 LoneStarHog
LoneStarHog's picture

Honestly, the old saying, "Ain't Worth The Price Of A Good Bullet", really applies to so many.  Just how friggin' ignorant/stupid are these people?!?

Mon, 05/24/2010 - 10:46 | 369981 whatsinaname
whatsinaname's picture

Stupid as stupid can be.

Mon, 05/24/2010 - 12:16 | 370206 Rider
Rider's picture

Take 8K tax credit and then a drop of 10 to 20% in your home value in the following years.

The American cosumer is SMART! 

 

Mon, 05/24/2010 - 10:36 | 369957 wang
wang's picture

As for the reason for the increase in existing home sales, even the NAR attributed that primarily to the ongoing tax-credit.

 

For the NAR and Mr. No Bubble Yun to make such a statement suggests things are not good.

Mon, 05/24/2010 - 10:43 | 369977 docj
docj's picture

And the inventory of future foreclosed properties and bankrupt debt-slaves increases yet again.

Mon, 05/24/2010 - 10:49 | 369993 Jeff Lebowski
Jeff Lebowski's picture

I found a typo...

"This is temporarily preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”

You're welcome.

Mon, 05/24/2010 - 10:52 | 369998 Deflationburger...
Deflationburger with Fleas's picture

GREEEEEEN SHOOOOOOOOOOOOOOOTS!!!!!

Mon, 05/24/2010 - 10:54 | 370007 Zombie Investor
Zombie Investor's picture

How does selling existing homes help the economy, other than income for realtors?

Mon, 05/24/2010 - 11:18 | 370059 ElvisDog
ElvisDog's picture

Well, if an existing homeowner with an underwater mortgage finds a greater fool to sell his house to, it helps both the existing homeowner and the bank that was hiding that bad mortgage off of its books. It's all good as long as the new homeowner is able to make his/her payments. If not, it's just kicking the can down the road but "extend and pretend" is the bank's Plan B anyway.

Mon, 05/24/2010 - 11:42 | 370103 IE
IE's picture

What Elvis said, plus it is safe to assume that there will be an increase in home improvement dollars spent when existing houses sell.  And the Realtor & lender revenues are also good.

But the point I think you're trying to make that it isn't a big GDP booster & job-creator (like new housing construction) is valid.

Mon, 05/24/2010 - 11:18 | 370058 Eternal Student
Eternal Student's picture

OMG. I can't believe that the NAR's "Chief Economist" made this statement:

The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”

Maybe it did save $1 Trillion for Middle Class Homeowners. But it cost more than that amount just to do it. Just look at the MBS purchases alone.

The big question is how long can this go on?

Mon, 05/24/2010 - 17:25 | 370952 Hephasteus
Hephasteus's picture

They'll pump 2 trillion to prop up the market just to keep from paying 50 billion to states to fix thier balance sheet for retirement funds. It's no longer about "owing" any more it's about how convoluted you can make things to keep "owing" on the right balance sheets and off the right balance sheets.

Mon, 05/24/2010 - 11:25 | 370065 John McCloy
John McCloy's picture

  Tax rebates, credits,low interest rates and Gagiollions of Fiatski Bernanke Bucks and these are the best figures that can be mustered in this recovery that we all knew was never arriving. They will never learn. Welcome to a modern depression

Mon, 05/24/2010 - 11:31 | 370077 sheeple
sheeple's picture

Talking to my fellow sheeples, some are buying home for 'not dumping their hard earn money into rent', a few are getting married so they need a hut, and a few said 'housing price could only go up you moron'

 

Mon, 05/24/2010 - 12:07 | 370168 SteveNYC
SteveNYC's picture

It is hilarious, I heard the same shit recently from a fairly senior finance guy (tool):

- Rent is "dead money" --> Oh, ok, but paying rent to the bank for your fuckin money is "alive money" right?

- Now is the best time to buy --> Yep, get in now or miss out forever!

- Inflation is coming in a big way, house prices will explode! --> Of course, supply has nothing to do with it. Inflation will just carry us to the promised land!

I'm out of real estate for at least the next decade, I'll happily stay in my "rented" condo, very, very happily I might add.

Mon, 05/24/2010 - 12:12 | 370186 Hulk
Hulk's picture

lucky dog!

Mon, 05/24/2010 - 12:54 | 370312 sheeple
sheeple's picture

what's more fucked up, the 'housing price would only go up you moron' was given by an ivy league finance professor (i'm serious)

Mon, 05/24/2010 - 13:19 | 370392 Hulk
Hulk's picture

Fucking academics. There is  a place for them, but reality ain't it...

Mon, 05/24/2010 - 11:36 | 370088 litoralkey
litoralkey's picture

Simple predictions as alluded to above,

inventories continue to increase,

sales decrease,

median prices decrease,

$1 trillion in housing wealth is corrected to market values,

the banks and FHA continue to mark to fantasy,

Freddie and Fannie request a minimum of $5B each at the end of this quarter,

the liabilities of the FHA on the US Treasury, and US taxpaying slaves, will increase by at least another trillion dollars in the quarter.

-------

P.S. Is it really necessary to have 6 tracking bugs on each ZH page?

Mon, 05/24/2010 - 12:07 | 370170 lizzy36
lizzy36's picture

FHA Home-Loan Volume Is Sign of `Very Sick System,' Agency's Stevens Says

“This is a market purely on life support, sustained by the federal government,” he said at the Mortgage Bankers Association conference. “Having FHA do this much volume is a sign of a very sick system.”

http://preview.bloomberg.com/news/2010-05-24/fha-home-loan-volume-is-sign-of-very-sick-system-agency-s-stevens-says.html

Mon, 05/24/2010 - 12:21 | 370223 superman07
superman07's picture

Any chance investors start buying severly depressed properties as a long term investment. It seems difficult to find large amounts of Gold with physical delivery, and stocks are all over the place. Even in this mire some properties may stand out as investment worthy.

Mon, 05/24/2010 - 12:52 | 370307 Village Idiot
Village Idiot's picture

Nothing wrong with a property that cash flows - just make sure to use very conservative numbers when determining what makes sense.

Mon, 05/24/2010 - 12:25 | 370231 carbonmutant
carbonmutant's picture

 Musings from Art Cashin...

"Permits in April fell by the most since December 2008, according to Commerce Department figures released today in Washington.

But permits were not the only weak spot in housing. Mortgage “purchase” applications have fallen sharply over the last two weeks. The numbers announced Wednesday were the lowest level of applications since May of 1997. That’s with mortgage rates falling.

 

With no QE 2 in sight the markets should glide... like a brick.

http://www.zerohedge.com/article/morning-musings-art-cashin-17

 

Mon, 05/24/2010 - 12:25 | 370237 Postal
Postal's picture

So, how do we blame this on the snow?

Oh, wait. That was unemployment.

Mon, 05/24/2010 - 12:53 | 370309 Rainman
Rainman's picture

With 2 more years of gimmick loans still to play out, Cali already has 15% of all home loans that are 30+ days late or worse. And the bankrupt State still has an up to $ 10,000 rebate program going on.

                    www.doctorhousingbubble.com

Mon, 05/24/2010 - 13:21 | 370400 Hulk
Hulk's picture

Goes to show you how important it is to keep housing prices up. Prices go down, consumer confidence goes way down and the charade is over

Mon, 05/24/2010 - 13:12 | 370369 snowball777
snowball777's picture

Now, now...before you poo-poo the homebuyer's credit, consider how rarely you get a chance to see how many home sales there would have been this summer so early in the year.

 

Mon, 05/24/2010 - 16:57 | 370910 OldTrooper
OldTrooper's picture

Never thought of it that way - I feel so much better!

Mon, 05/24/2010 - 13:17 | 370389 patience...
patience...'s picture

Actually having the NAR head cheese stating the tax

credit is responsible for the increase in sales is a good move.

Now maybe the politicians have a little pressure to extend the credit.

Mon, 05/24/2010 - 14:52 | 370479 Astute Investor
Astute Investor's picture

Is any asset that requires ZIRP to keep it alive really worth current market value?  Even short rates of only 1-2% would result in a steep decline in real estate prices from today's levels (likely crushing financial assets as well).  The economy is simply surviving through the use of performance enhancing drugs c/o the Fed.

Mon, 05/24/2010 - 13:57 | 370498 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I can not believe houses are being bought in this climate.....hasn't any of these people thought about supply?  There are so many houses I can not believe we still have homeless people!

Mon, 05/24/2010 - 14:18 | 370544 Mark Beck
Mark Beck's picture

The more the demand they pull into the present, the bigger the crash when it ends. So the people who just purchased, will almost immediately see a loss in home equity. That's just wrong.

Mark Beck

Mon, 05/24/2010 - 14:31 | 370585 hooligan2009
hooligan2009's picture

Right! Hopefully this isn't stupid, but the inventory supply of 8.4 months assumes that the current rate (of last minute grab at $8,000 in tax credit for c.10-20% risk on $200,000) is maintained. Unless the tax credit (i.e. subsidy from you and me) is extended, this will leap to 11 months, next month when the tax credit buyers vamoose. Hmmm..if everybody took the 8,000 credit and simply sold it immediately after, would we all get a tax credit of $8,000? Bleh...never mind...too late.

Mon, 05/24/2010 - 14:56 | 370638 Krypton Kent
Krypton Kent's picture

Like others, I've held off on buying and continue to rent a small place.. out here in so cal beach area... in short, my thought is - somehow - is inflation going to rush in a like a vacuum and help keep property values artificially propped up? So nominally they would be in the tank -- but $$ number wise -- the sticker price could still remain high?

In short -- can they hide coming inflation in highly inflated housing prices ? 

can anyone comment on that possibility - thanks 

Mon, 05/24/2010 - 15:36 | 370710 peripatetic86
peripatetic86's picture

How would one hide inflation in highly inflated housing prices?  If we have inflation of the sort that some are predicting, it will be a horrific situation.  As in past inflationary periods it is very likely that real wages will not rise with the increased prices and as a result joe6 struggles to buy food, pay for shelter and gas to get to his cubicle everyday.  Do you really think that everyone is going to be getting a hard on because the price of their house is higher as a result?  I don't think so. Keep renting.  Why pay rent to the bank?  Do you think inflation will be good for home sales?  I don't think so. Not to mention that with the property tax situation only getting worse in many localities, you can have local government slashing away any potential profits with the swipe of their blue pen.  Do you want to go long that trade? I don't.  

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