May 2010 Existing Home Sales Is Better Than The Headline Data Suggests
Existing Home Sales dropped in May for the first time in 3 months but still managed to post its second-highest since November 2009, buoyed by the expiring federal tax credit program.
An “existing home” is a home that cannot be considered new construction; a resale of an existing home. Existing Home Sales fell 2.2 percent in May.
The press is calling the drop in sales “unexpected” and disappointing, but a deeper look at the data shows the news isn’t as bad as it first appears.
First, on a regional basis, sales were mostly solid. Only the Northeast region posted a loss. The West even managed a gain.
- Northeast : -18.3 percent
- Midwest : 0.0 percent
- South : +0.5 percent
- West : +4.9 percent
Second, the supply of homes for sale dropped to 8.3 in May and, because home prices are based on supply and demand, this is a positive for pricing.
By comparison, in 2008, the average existing home inventory was 10.4 months.
And, lastly, in May, first-time home buyers represented 46 percent of all buyers. The number was likely buoyed by the tax credit program but that doesn’t damper the fact that first-time buyers provide a support floor for the housing market.
First-time buyers enable “existing owners” to move-up to bigger homes, which, in turn, trickles up to the mid-size and jumbo markets.
Analysts expected more from May’s numbers and that may explain why the reaction to the data is generally negative. However, in many cities, home resales did just fine.
Related posts:
- Existing Home Sales Rebound In August, Give Hope For Autumn
- More Positive Data From The Housing Sector: Existing Home Sales AND New Home Sales Rise
- Pending Home Sales Data Points To Higher Home Prices This Fall
Michael Haigh has 20+ years of professional experience in the banking and mortgage industry. He has the knowledge, education, and dedication to get you the best loan for your situation, answer your questions honestly and completely, and make your mortgaging experience a pleasure. His reputation includes being the number one lender in the country for CitiBank for 9 years, then at Chase for 1 year and now with WJ Bradley since August of 2009. This is because of the quantity of loans, myriad of people he's helped, and his dedication to helping his clients find the perfect loan for them.
