U.S. Existing Home Sales Increase To Annual Rate Of 5.19 Million In March

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 6.1% in March to a seasonally adjusted annual rate of 519 million. This annual rate is 10.4% higher than the 4.70 million-unit level in March 2014.

Lawrence Yun, NAR chief economist, says the housing market appears to be off to an encouraging start this spring. “After a quiet start to the year, sales activity picked up greatly throughout the country in March,” he said. “The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years.”

“The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign,” adds Yun. “For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market.”

Existing Home Sales Change

The existing home sales rate decreased in all 4 U.S. regions in March:

  • Northeast: 0.62 million from 0.58 million month prior.
  • Midwest: 1.20 million from 1.09 million month prior.
  • South: 2.19 million from 2.11 million month prior.
  • West: 1.18 million from 1.11 million month prior.

Existing Home Sales

Total housing inventory at the end of March increased 5.36% to 2.00 million existing homes available for sale. That represents a 4.6 month supply at the current sales pace.

Existing Home Supply

The median time on market for all homes was 52 days in March. That is down from 62 days in February. Short sales were on the market for a median of 165 days, while foreclosures typically sold in 56 days, and non-distressed homes took 51 days. 40% of homes sold in March were on the market for less than a month.

The national median existing home price for all housing types was $212,100, up 7.8% from a year ago.

Existing Home Sales Price

CFNAI Contracts To -0.42 In March

The Chicago Fed’s National Activity Index (CFNAI) was a reading of -0.42 in March, down from February’s revised reading of -0.18. The negative figure indicates that the index is below its historical trend. The index’s 3-month moving average is at -0.27.

38 of the 85 individual indicators made positive contributions to the CFNAI in February, while 47 made negative contributions. 37 indicators improved from February to March, while 48 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.

The Production and Income index component registered -0.27 from -0.08 last month. Employment and Hours was -0.03 from +0.11, Personal Consumption and Housing was -0.13 from -0.22, and Sales, Orders, and Inventories was +0.01 from +0.01.

CFNAI Components

CFNAI

P&I

E&H

C&H

SO&I

The CFNAI is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity. 

It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

U.S. House Prices In January 2015

U.S. S&P Case-Shiller Home Prices were little change in January, with the 20-city composite index decreasing by less than 0.1% (not seasonally adjusted). Year over year, the 20-City Composite is up 4.6%.

Case-Shiller Change

The national house price level is now roughly equal to where it stood in November 2004.

Case-Shiller Index Level

Of the 20 cities tracked in the index, Los Angeles has had the greatest increase in home prices since 2000, while Detroit has been the only city where prices have declined over the past 15 years.

Case-Shiller Cities

From a year ago, house prices have increased the most in Denver, where they rose 8.4%. Washington D.C. has had the slowest rate of annual increase, rising only 1.3%.

Case-Shiller Cities Change

Dallas and Denver are the only cities whose prices have increased beyond their pre-recession peak. Las Vegas remains the furthest below its peak.

Case-Shiller Table

The U.S. Federal Housing Finance Agency saw its national house prices increase 0.3% in January (not seasonally adjusted), and increasing 5.1% from a year ago.

The FHFA HPI is calculated using home sales price information from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac.

FHFA Change

The U.S. index is roughly the same as its December 2005 index level.

FHFA Index Level

Of the 9 different geographic census divisions that FHFA tracks, house prices have increased the most year over year in the Pacific and increased the least in the Middle Atlantic region.

FHFA Regions

House Price Bubbles And Buyer Overconfidence

An Extrapolative Model of House Price Dynamics:

A modest approximation by homebuyers leads house prices to display three features that are present in the data but usually missing from perfectly rational models: momentum at one-year horizons, mean reversion at five-year horizons, and excess longer-term volatility relative to fundamentals. Valuing a house involves forecasting the current and future demand to live in the surrounding area. Buyers forecast using past transaction prices. Approximating buyers do not adjust for the expectations of past buyers, and instead assume that past prices reflect only contemporaneous demand, as with a capitalization rate formula. Consistent with survey evidence, this approximation leads buyers to expect increases in the market value of their homes after recent house price increases, to fail to anticipate the price busts that follow booms, and to be overconfident in their assessments of the housing market.

U.S. Existing Home Sales Increase To Annual Rate Of 4.88 Million In February

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.2% in February to a seasonally adjusted annual rate of 4.88 million. This annual rate is 4.7% higher than the 4.66 million-unit level in February 2014.

Lawrence Yun, NAR chief economist, says although February sales showed modest improvement, there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” he said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”

Adds Yun, “Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country.”

“With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages,” adds Yun.

Existing Home Sales Change

The existing home sales rate decreased in 2 out of 4 U.S. regions in February:

  • Northeast: 0.58 million from 0.62 million month prior.
  • Midwest: 1.08 million from 1.08 million month prior.
  • South: 2.11 million from 2.07 million month prior.
  • West: 1.11 million from 1.05 million month prior.

Existing Home Sales

Total housing inventory at the end of February increased 1.6% to 1.89 million existing homes available for sale. That represents a 4.6 month supply at the current sales pace. Unsold inventory is down 0.5% from a year ago, when there were 1.90 million existing homes available for sale.

Existing Home Sales Supply

The median time on market for all homes was 62 days in February. That is down from 69 days in January. Short sales were on the market for a median of 120 days, while foreclosures typically sold in 58 days, and non-distressed homes took 61 days. 34% of homes sold in February were on the market for less than a month.

The national median existing home price for all housing types was $202,600, up 7.5% from a year ago.

Exiszting Home Sales Price

CFNAI Contracts To -0.11 In February

The Chicago Fed’s National Activity Index (CFNAI) was a reading of -0.11 in February, down from January’s revised reading of -0.10. The negative figure indicates that the index is below its historical trend. The index’s 3-month moving average is at -0.08.

48 of the 85 individual indicators made positive contributions to the CFNAI in February, while 37 made negative contributions. 46 indicators improved from January to February, while 39 indicators deteriorated. Of the indicators that improved, 10 made negative contributions.

The Production and Income index component registered -0.07 from -0.20 last month. Employment and Hours was +0.11 from +0.16, Personal Consumption and Housing was -0.17 from -0.07, and Sales, Orders, and Inventories was +0.02 from +0.01.

CFNAI Components

CFNAI

Production and Income

Employment and Hours

Consumption and Housing

Sales and Orders

The CFNAI is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity. 

It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.