Wednesday, April 20, 2011

March Existing Home Sales: 5.10 million SAAR, 8.4 months of supply

by Bill McBride on 4/20/2011 10:00:00 AM

The NAR reports: Existing-Home Sales Rise in March

Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7 percent to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3 percent below the 5.44 million pace in March 2010.
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All-cash sales were at a record market share of 35 percent in March, up from 33 percent in February; they were 27 percent in March 2010. Investors accounted for 22 percent of sales activity in March, up from 19 percent in February; they were 19 percent in March 2010.
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Total housing inventory at the end of March rose 1.5 percent to 3.55 million existing homes available for sale, which represents an 8.4-month supply4 at the current sales pace, compared with a 8.5-month supply in February.
Existing Home Sales Click on graph for larger image in new window.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in March 2011 (5.10 million SAAR) were 3.7% higher than last month, and were 6.3% lower than March 2010.

Existing Home InventoryThe second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 3.549 million in March from 3.498 million in February.

Inventory is not seasonally adjusted and there is a clear seasonal pattern with inventory peaking in the summer and declining in the fall and winter. Inventory will probably increase significantly over the next several months.

Existing Home Sales Months of SupplyThe last graph shows the 'months of supply' metric.

Months of supply decreased to 8.4 months in March, down from 8.5 months in February. The months of supply will probably increase over the next few months as inventory increases. This is higher than normal.

Special Note: Back in January, I noted that it appeared the NAR had overestimated sales by 5% or so in 2007, and that the errors had increased since then (perhaps 10% or 15% or more in 2009 and 2010). I reported in January that the NAR was working on benchmarking existing home sales for earlier years with other industry data, and I expected "this effort will lead to significant downward revisions to previously reported sales". The numbers reported today were estimated using the old method and will probably be revised down significantly, but they are still useful on a month-to-month basis.

These sales numbers were above the consensus of 5.0 million SAAR, and are about what I expected (Lawler's forecast was 5.08 million). I'll have more soon.