The green shoot is that while U.S. new home sales unexpectedly fell in March, down 0.6%, but the revisions more than made up for the decline. The prior two months were bumped up sharply. January's 322,000 figure is now 331,000 (a 2.8% adjustment), still a record low but not quite as low as everyone thought, and February's 337,000 figure is now 358,000 (or 6.2% higher.) Homebuilders continued to push their wares, pulling their inventories down to their lowest level in nearly eight years, or 45.6% below the July 2006 peak of 572,000 units. Inventories of both new and existing single-family homes are now down over 20% from their peaks.
At the current sales rate, the months supply of homes for sale dipped lower for the second month in a row, and at 10.7 months, is still high but the best reading since last July. Buo Builders have been throwing in all sorts of bells 'n whistles to get those new homes off their hands, but they're moving away from price slashes and more towards other incentives, like super low mortgage rates.
Low mortgage rates coupled with dropping inventories can provide the stability the housing market needs. This will take time, but we're finally seeing the improvement necessary for future price growth.
Andrew B. Busch
Author of: World Event Trading
www.andrewbusch.com
Improving Housing Trends
US existing home sales or EHS fell by 3.0% in March and this was disappointment falling to 4.57 mln units annualized. Both singles and multi-unit home sales took their share of the hit, down 2.8% and 4.1%, respectively. EHS represents 80 percent of the US housing market.
Who did buy? First-time buyers continued to heed the call of record affordability and record-low mortgage rates and super-low prices. They accounted for 53% of total sales last month. What was bought? Foreclosures remained the big story, making up more than half of overall sales.
Recall that new and existing home sales in Southern California (a state with a record high 11.2% jobless rate) surged 52.1% y/y in March. Indeed, the bulk of foreclosures in the first quarter was in California, Florida, Arizona, Nevada and Illinois and this is likely where much of the sales were.
Total inventories of homes that are in need of a buyer edged lower, sliding 1.6% in March. Within that figure, the number of single-family homes slipped 1.3%, or 19% below the peak. At the current sales rate, this translates into a months supply of 9.8 for overall existing homes, or 9.1 for single-family homes, higher than the rate in February and still a couple of months away from normal.