Still Struggling

The Lehmann Letter (SM)

Today the National Association of Realtors reported a small 2.2% drop in existing-home sales for May:

http://www.realtor.org/press_room/news_releases/2010/06/may_strong_pace

The Association's press release, in the lead sentence, said:

“Existing-home sales remained at elevated levels in May on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates….”

But the 5.6 6 million May figure for home sales doesn't look so impressive when imposed on the chart below.

Existing Home Sales

(Click on chart to enlarge.)



Recessions shaded

You can see that home sales are still struggling and well off the sharp jump enjoyed when the tax credit was first announced. We can't say that home sales are truly recovering until they remain solidly above 6 million after the expiration of the tax credit.

That's important because real estate was ground zero for the economy's collapse. Its true recovery will signal the economy's return to health.

(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2010 Michael B. Lehmann