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Existing Home Sales Hit 5.77 Million As Homebuyer Tax Credit Expires, Housing Inventory Highest Since July 2009
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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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?!?
Stupid as stupid can be.
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!
If the feds won't continue the programs...
For the NAR and Mr. No Bubble Yun to make such a statement suggests things are not good.
And the inventory of future foreclosed properties and bankrupt debt-slaves increases yet again.
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.
GREEEEEEN SHOOOOOOOOOOOOOOOTS!!!!!
How does selling existing homes help the economy, other than income for realtors?
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.
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.
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?
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.
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
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'
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.
lucky dog!
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)
Fucking academics. There is a place for them, but reality ain't it...
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.
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P.S. Is it really necessary to have 6 tracking bugs on each ZH page?
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
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.
Nothing wrong with a property that cash flows - just make sure to use very conservative numbers when determining what makes sense.
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
So, how do we blame this on the snow?
Oh, wait. That was unemployment.
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
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
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.
Never thought of it that way - I feel so much better!
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.
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.
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!
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
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.
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
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.