Thursday, May 25, 2006

Existing-Home Sales Slip

by Bill McBride on 5/25/2006 11:31:00 AM

The National Association for Realtors (NAR) reports: Existing-Home Sales Slip in April

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 2.0 percent to a seasonally adjusted annual rate1 of 6.76 million units in April from a downwardly revised level of 6.90 million in March, and were 5.7 percent below the 7.17 million-unit pace in April 2005.

Click on graph for larger image.

This is the first month of 2006 that is significantly below the same month in 2005. April 2006 sales (NSA) were 10.1% below April 2005.

Total housing inventory levels rose 5.8 percent at the end of April to 3.38 million existing homes available for sale, which represents a 6.0-month supply at the current sales pace.

The months of supply continues to rise. Many agents feel 6 months of supply is the danger zone - any additional supply and prices will start to fall. Some areas, like Boston, have significantly more than 6 months supply, and prices are already starting to fall.

As a reminder: Existing Home Sales is a trailing indicator. The weakness in New Home Sales, the NAHB index, and the MBA Purchase Index all suggest fewer existing home sales in the coming months.

And now from the always optimistic Lereah:
"... our forecast model is showing a modest decline for the second quarter with sales leveling out before rising in the fourth quarter."
David Lereah, NAR’s chief economist