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OPINION

Started Homes Go Begging

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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Existing Home Sales out Monday were a major disappointment. The annual pace of 5,080,000 for the month of February represents a 7.1% month to month plunge, far exceeding the -2.8% consensus estimate (5.32 million annual pace).

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According to the National Association of Realtors there are several reasons for the plunge including:

Supply

Prices

Investors

I think there’s something to be said about supply, particularly where professional investors and Chinese buyers have reemerged and are buying in bulk. Interestingly, only $100,000 and under homes saw a decline in sales. I think this takes some of the sting out of the report but homebuilders and everything else associated with the housing industry is under pressure today.

Existing Home Sales

% Change Year to Year

Region

$0-100K

$100-250K

$250-500K

$500-750K

$750K-1M

$1M+

Northeast

25.9%

10.8%

14.6%

13.1%

10.5%

20.3%

Midwest

-4.3%

8.8%

14.8%

2.4%

10.8%

-26.0%

South

-7.2%

10.7%

21.2%

12.4%

26.7%

7.0%

West

-28.6%

-8.6%

12.1%

14.7%

14.0%

13.5%

U.S.

-2.2%

8.5%

17.7%

14.2%

18.6%

11.9%

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The news pushed Goldman Sachs to lower its first quarter GDP estimate to 2.3%. For some reason however, Dennis Lockhart, President of the Atlanta Fed, says there could be a rate hike in April.

It’s really a crazy Federal Reserve that appears to be determined to keep investors off-balance but the question is why? With razor-thin credibility to begin with, one has to wonder what the heck Lockhart is thinking talking immediate rate hikes days after Yellen took them off the table.

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