DoomWatch: Lereah on January Existing Home Sales

February 2007
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By John M.

It’s Lereah Day.[1] Near the end of each month, NAR’s chief economist releases statistics on the previous month’s existing home sales. The Mainstream media avidly follows these numbers and Lereah’s (often hyper-optimistic) comments. The January analysis has just been released.[2]

MSM interpretations are coming in thick and fast. I’ve got a couple of links to these in the notes and will be back shortly with more in the comments.[3] [4] …

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Notes and References

[1]: Lereah is pronounced approximately La-Ray’, rhymes with "day."

[2]: "Existing-Home Sales Improve in January: Sales of existing homes rose in January, reaching the highest level in seven months, according to the National Association of Realtors", by David Lereah, National Association of Realtors (press release), February 27, 2007. Emphasis in the quotes is mine.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.0 percent to a seasonally adjusted annual rate1 of 6.46 million units in January from an upwardly revised pace of 6.27 million in December. Sales were 4.3 percent below the 6.75 million-unit level in January 2006." [looks like MoM is more fun than YoY these days]

[Lereah next notes that fine January weather probably boosted the stats and warned that February's bad storms will likely cause that month to dip.]

"Total housing inventory levels rose 2.9 percent at the end of January to 3.55 million existing homes available for sale …"

[followed by an explanation on why this isn't a problem]
…
"The national median existing-home price2 for all housing types was $210,600 in January, down 3.1 percent from January 2006 when the median was $217,400. The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said a broader view shows the housing market stabilizing. …"

[3]: "Existing-home sales rise 3% in January", by Rex Nutting, MarketWatch, February 27, 2007.

[4]: "Yen Gains Most in 10 Months as Investors Unwind Their Bets", by Min Zeng, Bloomberg, February 27, 2007.

The U.S. currency pared some of its losses after reports showed existing home sales in January rose more than economists forecast and a gauge of consumer confidence this month unexpectedly rose to the highest in more than five years.

Existing home sales gained to an annual rate of 6.46 million last month from a revised 6.27 million in December. Economists expected 6.24 million in a Bloomberg poll. The Conference Board’s consumer confidence index rose to 112.5 this month, from a revised 110.2 a month earlier, beating the economists’ forecast of 108.5.

[5]: Mrs. M and I are going to break for lunch, but I’ll be back with lots more shortly. In the meanwhile here’s a Google Search Cluster (15 stories), enjoy!

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John M. says:

February 27th, 2007 at 11:35 am

Next batch of stories.

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[6]: “Sales of Existing Homes Jump in January: Existing Home Sales Rise in January but Prices Keep Falling”, Martin Cruitsinger, AP / ABC News, February 27, 2007.

Wall Street ignored the improvement in consumer confidence and the jump in existing home sales to focus instead on a plunge in the Chinese stock market, which had been at record highs. At mid-day, the Dow Jones industrial average was down by more than 170 points.

[7]: [backgrounder from 6AM EST] “Ahead of the Bell: Existing Home Sales”, Associated Press, February 27, 2007.

NEW YORK — All eyes will be on the housing market Tuesday when the National Association of Realtors reports January data on existing home sales, with market watchers hoping for signs of stability in the sector.

[8]: “U.S. home sales rise as prices dip”, by Shobhana Chandra, Bloomberg, February 27, 2007.

The report suggests that housing, recovering from its worst slump in 15 years, may be less of a burden on growth this year, economists said. Cheaper homes and low borrowing costs are spurring sales, while a plunge in January housing starts reported this month shows builders are trying to reduce a glut of unsold properties.

[9]: “Florida’s Existing Home Sales Pace Slows, Median Price Edges Down in January 2007, According to Florida Association of Realtors”, Press Release, FAR, February 27, 2007.

The pace for Florida’s existing
home sales remained slow in January, though the inventory of homes began to
drop in many markets across the state, according to the Florida Association
of Realtors(R) (FAR). Statewide, sales of single-family existing homes
totaled 9,382 last month compared to 12,906 homes sold in January 2006 for
a 27 percent decrease.

[10]: “Low Mortgage Rates Keep Buyers in Illinois Housing Market”, Press Release, IAR, February 27, 2007.

Low mortgage interest rates keep buyers in the market despite the extreme winter weather in January, a typically slow month for the housing market in Illinois. According to the Illinois Association of REALTORS(R) latest report, total home sales (which include single-family and condominiums) were off 6.8 percent in January 2007 to 8,584 homes sold compared to 9,206 homes sold in January 2006.

February 27th, 2007 at 12:05 pm

more stories:

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[11]: “U.S. existing home sales rose 3.0 pct in January”, by Joanne Morrison, Reuters, February 27, 2007.

The pace of U.S. existing home sales rose 3.0 percent in January, the biggest jump in two years, the National Association of Realtors said on Tuesday in a report that was much stronger than expected.
…
“Nevertheless, whether it’s good weather or not, it’s a strong report,” Lereah said, noting there were price corrections in the West, particularly California.

“A price correction in California is now underway and it appears to be working,” he said. In the West, sales advanced by 5.6 percent. But they were still down 9.6 percent from a year ago.

The national median existing home price dropped nearly 5 percent in January to $210,600 from $221,600 in December. The price was 3.1 percent lower than in January a year ago.

[12]: “Treasury Bond Prices Gain As Stocks Fall”, Associated Press, February 27, 2007.

The market shrugged off a report from the National Association of Realtors that existing home sales rose in January to an annualized pace of 6.46 million, a 3 percent increase from 6.27 million in December and the fastest pace in 7 months.

However, the median home price fell in January to $210,600 compared with $221,600 in December and $217,400 in January 2006.

Analysts said the response to the existing home sales report was muted in part because of the drop in the median home price, and because of a pervasive belief in the market that some of the rebound could be attributed to unseasonably warm weather.

[13]: “Rough times may be ahead for stock markets”, by Kevin G. Hall, McClatchy Newspapers, February 27, 2007.

“And in another unexpected announcement, the National Association of Realtors reported Tuesday that existing home sales in January rose by 3 percent, the largest monthly jump in two years.

“The good housing news, however, was tempered by growing delinquent mortgage payments. The Mortgage Bankers Association recently reported that 3.8 percent of all adjustable-rate sub-prime mortgages are in foreclosure proceedings, up from about 3 percent in 2005, but well below the 9 percent rate following the 2001 recession. Sub-prime adjustable-rate mortgages make up less than 7 percent of all mortgages. Across all types of mortgages - fixed, adjustable, prime and sub-prime - about 4.67 percent of loans are in foreclosure proceedings, up slightly from a few years ago but not alarming.

“It’s not a great number, but it’s enough to make a dent on the sales numbers, so we’ll see (home) sales continue to drop in the end of this year,” said Patrick Newport, an economist with consultancy Global Insight in Lexington, Mass. “So far what we’ve seen is a lot of this has been contained to the mortgage market and particularly to the sub-prime market (of riskier borrowers.) No one has a sense of whether this will spread to other markets, like the prime mortgage market. So far it hasn’t.”

[14]: “INSTANT VIEW 4-US Jan existing home sales, Feb confidence”, Reuters, February 27, 2007.

“The housing correction evolves. It is shifting from the denial stage, in which sellers freeze, to the resigned action stage, in which sellers begin to capitulate. This development could weigh on consumer spending due to declining mortgage equity withdrawal and the negative wealth effect, although today’s consumer sentiment doesn’t show any concern about it.”

[15]: “Existing-home sales, prices continue to fall”, Linda Rawls, Palm Beach Post, February 27, 2007.

February 27th, 2007 at 12:11 pm

Bloggers (I’ll add to these here as I get them).

CalculatedRisk: January Existing Home Sales
TheHousingBubbleBlog: “Home Sales, Price Declines Encouraging”, and “Sales Pace ‘Remained Slow’ In January: FAR”
HousingWire: “NAR: Home Sales Volume, Median Price Drop”
Mike Larson: “My take on January Existing Home Sales”

Housing Doom

“He who defends everything defends nothing.” - Frederick the Great

DoomWatch: Lereah on January Existing Home Sales