Home sales up, but only slightly

Posted by: Prashant Gopal on June 26, 2008

Good news is a rare treat in this housing market. Today’s National Association of Realtors report is at least mildly positive. It shows that existing home sales rose 2% in May to an annualized pace of 4.99 million compared to the April pace (But nearly 16% below May 2007 pace).

Sales could be picking up, especially in states like Nevada, California and Arizona because investors, first-time buyers and others are jumping on the low prices available for foreclosed homes. But the sales increase is small and the monthly home sales pace has stayed pretty close to 5 million since the credit crisis began last August.

The inventory of unsold homes in May did indeed fall by 1.4% to 4.49 million homes, which is a 10.8 months’ supply at the current pace of sales. But 10.8 months is still a huge number, about twice what it should be in a more stable market.

Reader Comments

Jim D

June 26, 2008 6:32 PM

Doesn't the number tick up *every* spring?

Seriously, shouldn't you at least mention that?

The big story is that the "Spring Bounce" is pretty much missing this year, but you don't mention that either.

ming

June 26, 2008 8:48 PM

Two stupid questions:
1. "existing home sales rose 2% in May", usually during spring and summer it's time to buy house, isn't it? Is this rose the "first sign of house market recovery" or just normal sales rose and fall during a year?

2. "The inventory of unsold homes in May did indeed fall by 1.4%", is this the result of "2% sales rose" or just some seller take the house out of the market, waiting for a better deal in the future?

ming

June 27, 2008 1:38 PM

Jim,
we are talking about the same problem -:)

Noelle

June 28, 2008 4:42 PM

The sales price was also down 6.3% from May 2007, something the article neglects to mention. We are now entering the summer months when people pull their listings, so anticipate a big uptick in inventory after Labor Day, which will only push prices down further.

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About

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.

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