More housing statistics shockers today: the NAR said sales of previously-owned homes fell 2.6% in April to an annual rate of 5.99 million, the lowest level in nearly four years. Month’s supply moved up to 8.4 months, the highest since the early 1990s. The announcement came in the wake of a government report that showed a jump in new-home sales in April, so it was dubbed “unexpected.” But I can’t say I was surprised this time.
Neither was NAR senior economist Lawrence Yun—in fact, he seemed downright pleased. “We’ve been anticipating slower home sales because many subprime loan products are no longer available,” he said. “In addition, increased scrutiny by lenders is stopping risky mortgage origination, which is good for both consumers and he lending community. Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help to stabilize the market going forward.”
I spoke with Yun the other day for an article on April home sales (our new-home prediction was off but we were right-on with existing) You can read it here.
So why did new-home sales increase and existing-home sales decline? “The new home sales numbers tend to lead the existing home sales numbers by a month or two, because a new home sale gets recorded when the buyer signs the initial papers or makes a down payment, while an existing home sale gets recorded when the transaction closes,” notes Global Insight economist Patrick Newport. “The new home sales, therefore, point (tentatively) to better existing home sales numbers down the line.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.