After jumping 26 percent on a year-over-year basis to 5.77 million in April, the pace of existing U.S. home sales fell 2.2 percent to 5.66 million in May, up 2.7 percent year-over-year as inventories dropped (unlike in San Francisco) 3.4 percent to 3.89 million.
Existing U.S. Home Sales Up In April Along With Inventory [SocketSite]
Purchases of U.S. Existing Homes Unexpectedly Fall [Bloomberg]
SocketSite’s San Francisco Listed Housing Inventory: 6/14/10 [SocketSite]

Comments from Plugged-In Readers

  1. Posted by scurvy

    Expected to be weak, but not this weak.

  2. Posted by lol

    That didn’t take too long…
    Of course these 8K were almost insignificant in SF where the median is close to 4X the US median.
    Still, having this incentive expire right in the core of the home shopping season was a pretty bad idea. I don’t know how much momentum we will have for the second half of the year.
    The summer just started and many are going back to their 2009 waiting mode already.
    I wouldn’t want to be a seller who has missed out on the now DOA spring bounce, that’s for sure!

  3. Posted by scurvy

    @lol why do you think it was a bad idea? This was an artificial stimulus to try and get things going again. If it worked, you wouldn’t need the artificial breaks during peak buying season. If it failed, why reward someone who was going to buy anyway?
    For once, something related to housing actually makes sense.

  4. Posted by lol

    My comment was that you don’t pull the subsidy right before the slow season. Now there’s the double-whammy of seasonality added to the depletion of the buyer pool by the subsidy. Low tide meets spring tide. The second half of 2010 will look like crossing the Atacama desert on a limping burro. With better timing, they could have mitigated the upcoming low tide.
    In general, subsidizing housing to make it affordable is never a good idea. If someone is motivated to make a purchase at 200K thanks to a 8K kickback from the taxpayer, then he’ll also do the same purchase at 192K. The taxpayer wasted 8K. The buyer overpaid by 8K but was made whole by the taxpayer. The seller side is the only one getting anything out of this. Dis they need that subsidy? Did it create any job?
    Once again, Govt meddling where it shouldn’t, using the taxpayer’s endless stupidity to try and appease the wolves.

  5. Posted by zig

    “Once again, Govt meddling where it shouldn’t, using the taxpayer’s endless stupidity to try and appease the wolves.”
    I would see the “meddling” as a continuum since at least just after WWII wouldn’t you?

  6. Posted by lol

    zig,
    Yes, there’s a lot of “built in meddling” already. Why add even more distortion? We all know the original purpose of these interventions is to make homes more affordable which always converts into making homes more expensive. Tax savings on residential mortgage interest is one of them: the Govt will help you pay that interest which is why you should make as much debt as you possibly can. Ludicrous. Joe Schmoe could afford a 200K home on his 40K salary before tax savings. With the tax savings he can afford 250K. In theory it means he can afford more house. In practice it means the formerly 200K house has more market and will increase in price to 250K. Joe Schmoe will borrow more as a result. Nothing productive was done except transform debt into cash one time only. That cash has to be repaid over the duration of the mortgage, but usually that debt is kicked down the line to the next buyer who will mortgage himself to the hilt to get free Govt pork (so he thinks). The incentive created new debt that will in practice never going to be repaid. Pure folly.

  7. Posted by sfrenegade

    “I would see the “meddling” as a continuum since at least just after WWII wouldn’t you?”
    Yes and no. In the current situation where 96.5% of home loans are government backed, it certainly sounds like a lot of meddling. Government subsidies for home loans made slightly more sense when they actually were meant to help people who need help. There’s no good reason for government subsidies apply to loans above the old conforming limit of $417K, and even that limit is probably high. I certainly don’t see why anyone in the top 20% of household income should get subsidized home loans.
    The problem with non-market rate loans is that they have completely distorted property values. People would be much better off with higher interest rates and lower property values. Instead, we’re basically seeing Bubble II, and it appears that the government is trying to put a floor on housing prices. The bigger problem is that adding more debt will not fix the previous problems we’ve had in the housing market and with bank balance sheets.

  8. Posted by tipster

    On the heels of this report, I think if I were a buyer with an accepted, but still pending, offer, I’d renegotiate the price with the seller down by about 10%.
    Find some trivial flaw on the inspection report, and let ‘er rip. “There is a slight scratch on the bottom cabinet screw on the lower kitchen cabinet. I need $100,000 off or I walk” should do the trick.
    The seller is never going to want to relist in this less supported market.

  9. Posted by John

    Geez, tipster, you have never bought, have you?
    The seller can simply fix all your “trivial flaws” for $500 instead of giving you $100,000.

  10. Posted by The Milkshake of Despair

    John – The buyer can opt out of the contract based on a vague rejection of the property inspection report. There’s no requirement for the buyer to specify what was wrong and allow the seller to remedy the problems.

  11. Posted by anon

    In San Francisco May’s sales were up over April’s by more than 30 percent
    [Editor’s Note: Close but not quite: San Francisco Recorded Sales Activity In May: Up 23.7% YOY.]

  12. Posted by sfrenegade

    “In San Francisco May’s sales were up over April’s by more than 30 percent ”
    This is no surprise given that the CA tax credit pushed sales from April into May.

  13. Posted by badlydrawnbear

    Here’s a possible preview of the, national, sale numbers in June …
    The Refinance Index decreased 7.3 percent from the previous week and the seasonally adjusted Purchase Index decreased 1.2 percent from one week earlier.
    The graph shows the MBA Purchase Index and four week moving average since 1990.
    The purchase index has collapsed following the expiration of the tax credit suggesting home sales will fall sharply too. This is the lowest level for 4-week average of the purchase index since February 1997.
    http://www.calculatedriskblog.com/2010/06/mba-mortgage-purchase-applications_23.html

  14. Posted by anon

    Editor’s Note: Close but not quite: San Francisco Recorded Sales Activity In May: Up 23.7% YOY.]
    498 over 379 is more than 23.7 %.

  15. Posted by tipster

    ^Um, are we mixing MOM and YOY? If so, I’m LOL.

  16. Posted by lol

    No you’re not

  17. Posted by sfrenegade

    tipster, did you read the thread the editor linked to? The MOM was 43.9% and the YOY was 23.7%. The “anon” was just generally wrong — 498 is the figure for May 2009.

  18. Posted by A.T.

    “498 over 379 is more than 23.7 %.”
    That’s true! But those are not the recorded sales figures.

  19. Posted by anon

    Yes they are, for month over month. I’m not sure what was so funny either.

  20. Posted by anon

    498 is the figure for May 2009.
    That was for May 2010. 379 was April 2010. Year over year so far it’s 2119 to 1561 or 35.7% up and a 710K over 680K median.

  21. Posted by sfrenegade

    anon/fluj, please provide your source. The editor said in the linked post: “According to DataQuick, recorded home sales volume in San Francisco was up 23.7% on a year-over-year basis last month (616 recorded sales in May ’10 versus 498 sales in May ‘09) and up 43.9% as compared to the month prior.”
    DataQuick has 428 for April ’10, which would be 43.9% MOM, as the editor said.
    http://www.dqnews.com/Articles/2010/News/California/Bay-Area/RRBay100617.aspx
    http://www.dqnews.com/Articles/2010/News/California/Bay-Area/RRBay100520.aspx

  22. Posted by anon

    The source is the MLS. May 2009 was 349 sales according to that database. No, I’m another guy with access to the MLS. But it looks like the Dataquick data is wrong because two 498s doesn’t seem right.

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