US existing home sales fell
0.6% m/m to 4.92mn units in March below consensus estimates of 5.00mn units.
The 3 month over month average in existing home sales is now 4.94mn units,
above the 4.90mn units in Q4 and the 4.74mn units in Q3, and broadly consistent
with expectations for continued momentum in US housing. Existing home sales are
now up 10.3% y/y with sales of both existing single family homes (+9.1% y/y)
and condos/co-ops (+20.0%) up solidly.
A potential explanatory
factor for the shortfall relative to consensus forecast is the scarcity of
inventory. March inventory of 1.93mn units is the fifth consecutive month that
inventories have remained below 2.0mn units, the first such extended period
dating back to 2005. Inventory has ticked up modestly in the past two months
standing at 4.7 months versus 4.3 in January with overall inventory levels
remain lean by historical standards. The percentage of distressed transactions
fell to 21% in March, whereas this percentage had been fluctuating several percentage
points higher in recent months. The fraction of transactions relating to both
foreclosures and short sales were lower on the month with days-on-market
falling to 62 from 74 in February. Inventory levels should remain in the 4.5 to
5.0 month range for the remainder of the year, similar to pre-crisis levels.
The composition of buyers of existing home has been fairly constant with
first-time homebuyers at 30%, one-third of all transactions conducting in cash,
and about one in five transactions as self-identified investors.
Lean inventory levels,
however, are likely supporting home price appreciation. Median home prices were
up 11.8% y/y and average home prices were up 9.9% y/y. Both are in line with
what we have observed in other national home price indices. Home prices should
rise another 6-7% in 2013 as low inventory and gradually improving housing
demand are expected to offset a sizeable fiscal drag and tight credit
conditions in mortgage markets.
Figure 1: Existing home
sales and inventory
