Existing Home Sales for April 2009

Thanks again to Calculated Risk for the great charts.   I’ll add my own commentary, but check out Bill’s analysis of it as well…..

If you listen to many of the headlines, you’ll hear them talking about how existing home sales were up.   Well, guess what.   They really weren’t.   To do a true comparison, you need to look at April to April, not March to April.   Yeah, they were up compared to March, but they were down by 3.5% from April of 2008.   I don’t know exactly how many, but I’m confident it’s the majority of the last 20 years have shown an increase from March to April of any given year.

Also, this number shows that almost 50% of the homes that were sold in April of 2009 were “distressed” sales.   That means that there were a LOT less move up buyers than normal.    Look at that chart above and check out where the 3,000,000 unit mark is.   That’s where we’d be without the foreclosures.    Not a pretty picture.

Inventory levels – the “market assumption” is that a healthy balance between buyers and sellers is approximately a 6 to 7 month inventory of homes for sale.    That means that if you stop putting houses on the market now, by January of 2010, there would be nothing for sale.

A stunning portion of that inventory number is the higher priced homes.   On a national basis, in the $750,000 or higher price range, there are currently 40 months worth of inventory for sale.    That’s not a misprint.   40 months. 

So, home sales are “up” but inventory levels are also up.   You really want to burn off inventory, not add to it.

If you recall what I wrote earlier about housing inventory problems, you’ll be aware that there is a lot of “shadow” inventory that’s out there.   Once we see signs of a bottom, expect inventory levels to shoot upward again.

While we’re at a lower inventory level than we were last year, we’re still about 70% higher on the inventory levels than we should be in order to be “healthy.”

So, was April a disastrous month for housing?  No.   But was it a good month?  Not quite that either.

Tom Vanderwell

Housing Starts

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