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).
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% |
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.