February Home Sales Rise
There’s a glimmer that the worst maybe over in the housing market. Housing sales increased more than expected:
Sales of existing homes increased unexpectedly in February after six months of decline, but private economists said it was too soon to say that the prolonged slide in housing is coming to an end.
The National Association of Realtors said sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It marked the first sales increase since July, but even with the gain, sales were still 23.8 percent below where they were a year ago.
Prices continued to slide. The median sales price for single-family homes and condominiums dropped to $195,900, a fall of 8.2 percent from a year ago, the biggest slide in the current housing slump. The median price for just single-family homes was down 8.7 percent from a year ago, the biggest decline in four decades.
Wall Street, which had been expecting another decline in home sales, was encouraged by the February increase as well as improved terms for Bear Stearns stockholders in the sale of that company to JPMorgan Chase. The Dow Jones industrial average rose 187.32 points Monday to close at 12,548.64. The other major indexes were up as well.
Basic economics is at work here. As prices goes down demand for housing goes up. Homes that people could afford at bubble prices become more affordable.
There’s still the weight of billions of dollars in bad mortgages upon financial markets. It will take time to write the truly bad ones off and renegotiate with more credit worthy home owners. We also haven’t seen the full effects of the housing market crisis work its way through the rest of the economy. New York City braces for financial job losses.
But if we’re at the bottom of the crisis then it undercuts ThinkProgress’ complaint that Sen. McCain has been late on this issue [via memeorandum].
This follows some reporters’ errant idea that Republicans solely are to blame for the downturn.
“Home Sales Rise as Prices Drop”
UPDATE: Discount the National Realtors Association. They engage in plenty of spin. From The Big Picture:
As we noted yesterday, that was not what the data stated at all: “Changes from January to February are measuring seasonal differences, not actual improvements in house sales.” Can you imagine what it would be like if we reported retail sales from December to January this way? Headlines would misleadingly state: “Retail sales plummet 65%!” That is why with highly seasonal data series, the preferred methodology is to report year-over-year data — not month-to-month variations.
And what were those numbers? The year-over-year data for existing home sales were DOWN 23.8% below February 2007 levels. That datapoint never found its way into the WSJ article at all. I cannot recall a more blatant misreporting of fact, or a larger or more embarrassing error in a front page WSJ article, ever.
My analysis still holds, plus these numbers are one momentary piece of data. We need to see more in either direction to glimpse a trend.
