Existing Home Sales Approach Four-Year Low

The National Association of Realtors said Monday that sales of existing homes in May fell to their lowest point in almost four years. Sales fell 0.3% m-o-m to an annualized 5.99 million, the poorest performance since June 2003 and a 10.3% decline from the year before. The number of homes on the market reached a 15-year high at almost nine months of sales volumes, a 5% increase over the previous month. Prices have been cut by an average $223,700, a 2.1% y-o-y drop and the tenth straight month of price declines. "[T]his was in line with expectations," said Bank of New York analyst Michael Woolfolk, "and we don't see further deterioration of the magnitude we were concerned about earlier this year." Other analysts, however, caution the slump has not reached a bottom. "[F]alling prices and record high inventories leave little doubt that the 'correction' in the housing market is nowhere near ending," said David Resler, chief economist at Nomura Securities. The WSJ points out that people trying to sell their homes are facing fierce competition from homebuilders, who are cutting prices sharply to trim inventories. CNBC's Diana Olick notes that the "household formation" gauge, which measures first-time homebuyers, fell 70% in Q1 versus last year. Annualized, that amounts to 500,000 -- an unusually low figure that is generally seen "in a real economic recession."

Sources: Guardian, Wall Street Journal, Bloomberg, CNBC
Commentary: Economic Report Summary: Negative Housing Reports Nix Short-Term Rebound • Eleven Good Points On Residential Real Estate • Most Over/UnderValued U.S. Housing Markets
Stocks/ETFs to watch: streetTRACKS SPDR Homebuilders ETF (XHB), iShares Dow Jones US Home Construction (ITB)

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