Existing Home Sales and Median Prices Increase in May

WASHINGTON (Dow Jones):

Existing-home sales improved again in May, but falling prices and bloated supply promise to make a housing sector recovery slow.

That's one way to look at it. Here's are some alternative views:

1. The April to May increases in median home prices (3.84%) and mean home prices (3.26%) were the largest monthly price increases in more than a year (data here).

2. The monthly May increases in both median home prices (3.84%) and homes sold (2.36%) was only the second time in at least a year that both prices and unit sales increased in the same month.

3. The back-to-back increase in home sales in both April and May is the first time in at least a year of two consecutive monthly increases.

4. The most recent two-month increase in sales of 4.84% is the largest since April 2004 (source).

5. The 9.6 months supply of inventory in May is below last year's May level of 10.9 months by more than five weeks, and is at the second-lowest level in the last year.

According to Brian Wesbury and Bob Stein:

The data today are consistent with our outlook that the economy is recovering from a panic. Home sales, building activity, and the rate of decline in home prices all seem to be bottoming or have already formed a bottom. In fact, the level of existing home sales in May was the highest since October 2008.

Comments

[jeandit75:]

The prime and mortgage reset wave coming will clean things up. These numbers are consistent from a stabilization prior to the last leg of decline. I just hope Perry dares continuing posting numbers when they start collapsing again.

Jun 23 02:39 PM

[Mad Hedge F...:]

It certainly is a muddy picture. Since I have been pelted daily with predictions that residential real estate has bottomed for the last 18 months, like hail in a Midwestern summer thunderstorm, I feel a public duty to tell you that is just not the case. Now that the state and federal moratoriums are off, foreclosures are accelerating. There are over a million Option ARM and Alt-A loan resets about to hit the fan. Since many owners will not see positive equity in their homes in their lifetimes, banks are seeing more walk always. The run up in mortgage rates from 4.5% to 5.5% has yet to hit the market. Some 18 million homeowners divert 50% of their incomes to pay for housing, double the 25% that is considered healthy, and many of them are losing jobs. While the volume of units sold has rebounded, the action is dominated by speculators, flippers, and bottom feeders bidding for properties at 10-40 cents on the dollar, not exactly a sign of health. Call me when Ozzie & Harriet Nelson come back to the market. I listen to industry insiders call the bottom of the Japanese real estate market for 15 years, until they finally died, and the market is still a fraction of its 1990 high. I thing we are closer to the bottom than the top in terms of price, but closer to the top than the bottom in terms of time. You can take that to the bank.

Jun 23 02:44 PM

[john s. gordon:]

'bottom has been predicted each month for the last 18 months' -

this sounds similar (only inverted) to the economists who have predicted 18 of the last 11 recessions.
> jack

Jun 23 05:02 PM

[Tim Plaehn:]

My prime arm mortgage will reset this fall from the current 4.875% to about 3.5%. With LIBOR rates at current levels those who still want to pay their mortgages will be getting lower payments with resets.


On Jun 23 02:39 PM jeandit75 wrote:

> The prime and mortgage reset wave coming will clean things up. These
> numbers are consistent from a stabilization prior to the last leg
> of decline. I just hope Perry dares continuing posting numbers when
> they start collapsing again.

Jun 24 09:05 AM

[Tim Plaehn:]

This is the first time in those 18 months that prices have shown an upward movement. Let us see what happens in the next few months.


On Jun 23 05:02 PM john s. gordon wrote:

> 'bottom has been predicted each month for the last 18 months' -<br/>
>
> this sounds similar (only inverted) to the economists who have predicted
> 18 of the last 11 recessions.

Jun 24 09:06 AM