Friday, March 22, 2019

Comments on February Existing Home Sales

by Calculated Risk on 3/22/2019 11:49:00 AM

Earlier: NAR: Existing-Home Sales Increased to 5.51 million in February

A few key points:

1) Seasonally February is one of the weakest months of the year for existing home sales (See Not Seasonally Adjusted NSA graph below).  Since existing home sales are counted at closing, these are properties that usually went under contract during the holidays or in early January.   So I wouldn't read too much into the pickup in February.   Sales will be stronger seasonally over the next several months.  The headline number was not a surprise (see note 3), and the pickup was probably due to lower mortgage rates and a stronger stock market (so buyers were more confident).  But the next several months are more important for existing home sales.

2) Inventory is still low, and was only up 3.2% year-over-year (YoY) in February. This was the seventh consecutive month with a year-over-year increase in inventory, although the YoY increase was smaller in February than in the three previous months.

3) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus. See: Lawler: Early Read on Existing Home Sales in February.   The consensus was for sales of 5.08 million SAAR, Lawler estimated the NAR would report 5.46 million SAAR in February, and the NAR actually reported 5.51 million SAAR.

Existing Home Sales NSAClick on graph for larger image.

The second graph shows existing home sales Not Seasonally Adjusted (NSA).

Sales NSA in February (312,000, red column) were below sales in February 2018 (319,000, NSA), and sales were the lowest for February since 2015.