Friday, January 20, 2012

Home Sales: No True Recovery Yet

The Lehmann Letter (SM)

Take a look at today’s bulletin on existing-home sales from the National Association of Realtors:

It begins:

“Existing-home sales continued on an uptrend in December, rising for three consecutive months and remaining above a year ago, according to the National Association of Realtors®.

“The latest monthly data shows total existing-home sales1 rose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.

“Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery. “The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

“For all of 2011, existing-home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.”

Now take a look at the historical data.

Existing Home Sales

(Click on chart to enlarge)

(Recessions shaded)

The realtors’ bulletin speaks of home sales that have fluctuated in the 4 to 5 million range for two years. The most recent data may be part of an upward trend that has unfolded over the past several months, but sales remain weak when compared to the 6+ million level enjoyed during the boom of several years ago.

December’s rate was 4.6 million. The data need to break through 5 million and continue rising before home sales are well on their way to real recovery.

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© 2012 Michael B. Lehmann

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