by Bill McBride on 3/23/2015 12:28:00 PM
Monday, March 23, 2015
Inventory is still very low (down 0.5% year-over-year in February). This will be important to watch over the next month at the start of the Spring buying season.
Note: As usually happens, housing economist Tom Lawler's estimate was closer than the consensus to the NAR reported sales rate.
Also, the NAR reported total sales were up 4.7% from February 2014, however normal equity sales were up even more, and distressed sales down sharply. From the NAR (from a survey that is far from perfect):
Distressed sales – foreclosures and short sales – were 11 percent of sales in February, unchanged for the third consecutive month and down from 16 percent a year ago. Eight percent of February sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in February (15 percent in January), while short sales were discounted 15 percent (12 percent in January).Last year in February the NAR reported that 16% of sales were distressed sales.
A rough estimate: Sales in February 2014 were reported at 4.66 million SAAR with 16% distressed. That gives 746 thousand distressed (annual rate), and 3.91 million equity / non-distressed. In February 2015, sales were 4.88 million SAAR, with 11% distressed. That gives 537 thousand distressed - a decline of about 28% from February 2014 - and 4.34 million equity. Although this survey isn't perfect, this suggests distressed sales were down sharply - and normal sales up around 10%.
Important: If total existing sales decline a little, or move side-ways - due to fewer distressed sales- that is a positive sign for real estate.
The following graph shows existing home sales Not Seasonally Adjusted (NSA).
Click on graph for larger image.
Sales NSA in February (red column) were slightly higher than last year (NSA), and below sales in February 2013.
• Existing Home Sales in February: 4.88 million SAAR, Inventory down slightly Year-over-year