Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends. (National Association of Realtors) Why Investors Care
| Released on 4/24/07 For Mar 2007 | ||||||||||||
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Highlights
Existing home sales fell a sharp 8.3 percent in March to a lower-than-expected annual rate of 6.12 million. There are many headlines in this report and all bad: largest monthly drop since January 1989, lowest sales level since June 2003, sharp rise in supply, declines across all four regions. The report, compiled by the National Association of Realtors, blamed heavy weather in the month and trouble in the subprime mortgage industry which, hitting at a bad time, has tightened lending standards.
Supply, already a big worry in the housing sector, rose to 7.3 months from 6.8 months in February and 6.6 months in January. Rising supply of homes on the market points to yet slower rates of construction. The median price rose 1.6 percent in the month to $217,000, though the year-on-year price is down 0.3 percent.
This report is unwelcome news for industries serving the housing market: construction, home-products manufacturing, home-products retailing. Though initial reaction was hard to gauge given the accompanying release of consumer confidence data, the results will raise talk that the worst may not yet be over for the housing market.
Existing home sales gave the equities markets a boost last month with sales posting a sharp 3.9 percent. But supply on the market failed to improve, at 6.7 months vs. 6.6 months in both January and December. Focus again will be on both the sales pace and the supply of unsold homes.
Existing home sales Consensus Forecast for March 07: 6.40 million-unit rate
Range: 6.30 to 6.76 million-unit rate
![[Chart]](chart.gif)
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Existing home sales reached a peak in mid-2005 and have been easing since. Typically, a distinct reverse relationship exists between home sales and mortgage rates. |
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