Economic Notes: Pencil & Eraser
4/24/2009
Housing returned to the fore this week with reports on sales of existing and new homes nationwide in March. While activity slowed further, the trend line appears to be flattening, once again prompting the question: has housing bottomed?
The National Association of RealtorsÒ reported that between February and March (m/m) the number of resales was off by 3.0%. While on its face this looks like “more of the same” (Chart 1), two near-term trends are noteworthy.
First, sales volume has not declined in two consecutive months since November and over that period sales volume has been virtually flat (+0.7%).
Second, existing home prices are up 6.3% since January.
New home sales volume (Chart 2) was flat in March (-0.6% m/m) and prices continued to slide (median -2.6% m/m) according to the Census Bureau. As with resales, there are two interesting near-term developments.
First, March’s new home sales were 7.6% higher than January’s.
Second, as a result of aggressive discounting and record-low homebuilding, the inventory of new homes is lower than at any time since March 2002.
Pencil in March 2009 as housing’s bottom. But since the rest of the economy is still struggling, keep your eraser handy.
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