While a standard seasonality bump from January to February should be kicking up the pace of existing U.S. home sales, “purchases dropped 0.6 percent to a 5.02 million annual rate” while inventory increased 9.5 percent to 3.59 million listed homes for sale last month.
Once again, 5.16 million previously owned homes sold in 2009 (4.91 million in 2008).
U.S. Previously Owned Home Sales Sucking A Little More Wind [SocketSite]
Sales of Existing Homes Decrease, Supply Climbs [Bloomberg]

23 thoughts on “Existing U.S. Home Sales Struggling To Find A Second Wind”
  1. As the general stock market shows by its positive reaction to this news, this is actually all good news. This is what the bottom of a market looks like. Its a turning point. declines slow. sure there is a large inventory — that is expected. The point is the change in motion in the market. Think first order derivatives and inflection points.
    of course, the bottom of any market is always scary looking. For those of us who invested in the general market last march, there was a wave of worry and fear and doom sayers predicting further declines. they were wrong and missed out on 60+% growth.
    We are in a similar moment for SF real estate. yup — plenty to worry about. fear mongers will scream doom. Any simplistic linear analysis will show a continuation of some trend to certain doom, but the reality is that the momentum has shifted.

  2. “…the reality is that the momentum has shifted.”
    Laughable. The real reality is that our benevolent central planners nationalized the financial market, then borrowed trillions from China to cover every bleeding gash with a band-aid. Now we just need to find a way to borrow ourselves out of this debt, and everything will be fine.
    Speaking of which, I seem to have misplaced $126 billion. Has anyone seen it?

  3. Big V’s statement is the biggest load of aspirational horsecrap I’ve heard since I rid my life of marketing twerps.
    Rather than addressing Big V’s unsubstantiated hand-waves at 1st and 2nd order derivatives, allow me to reference the statements of Janet Yellen, as nicely excerpted by calculated risk:
    “In the second half of 2009 though, housing showed signs of stabilizing and I became hopeful that the sector would provide a significant boost to the economy this year. Now the market seems to have stalled.”
    “we’ve seen no let-up in the pace at which borrowers are falling behind in their loans. Further additions to the already swollen stockpile of vacant homes represent a threat to house prices and new home construction activity.”
    “I am also concerned that we had a temporary reprieve in new foreclosures as the federal government’s trial modification program got under way.”
    My interpretation? The government’s program of free money for first-time buyers gave the falling cat a jetpack. Now that jetpack is out of fuel and the fall has resumed.

  4. What does this have to do with SF, where nearly everything is existing stock? Not much. Nor does the credit. Is the superconforming FHA stopping any time soon? No, it isn’t.

  5. charts of inventory and months of supply are an example of an over simplified linear assumption about the market. Remember, the housing market is a complex non-linear beast where you have to see the full pattern and dynamic to understand where it is going. For example, looking at absolute inventory numbers and comparing to prior years behaviors at those levels in meaningless — too simplistic. Supply *and* Demand. High supply is not a problem if you also have high demand. Here is SF there is clearly pent up demand. Good houses are jumping off the market as fast as they hit it today.
    “months of supply” is a backwards looking metric. It uses recent rate of sales to predict forward — so coming out of the winter you would always expect that metric to go up as new inventory hits the market but the denominator (the rate of sales) represents winter time slowlness.
    and that is really the thing — so many metrics are backwards looking — so we get “bad news” today which really represents the reality of a month or two ago. This doesn’t make it bad data — its all we got — but you have to think carefully about it. What do the trends really represent, and what is happening today?
    And its the “today” part that matters. If you feel the pulse of it, it feels fundamentally different than 4 months ago. Houses are getting multiple bids, going over asking, etc. Houses that sat on the market for months last year and were delisted are being returned to the market and purchased. People are buying what they wouldn’t buy last year. that is significant.
    I have nothing to gain here, but I do have something to share. For every market, the bottom is called laughable by the masses of doomsayers, blinded by their own fear. I have nothing to sell, but courage and an eye for complex dynamic systems and how they behave. I will not be able to prove it to you, because understanding complex systems is a fusion of data and non-linear intuition.
    if you do not have the fear of doom in your gut when you purchase an asset — if you feel that the market is safe — then you are a sucker buying at the wrong time.

  6. Also remember LIFO – last in first out. Good assets are the last to lose value, and the first to recover during a market downturn. SF real estate is a good asset. yup, it lost value, but it was one of the last area’s to do so. you can expect it to lead the nation out of the housing market recession.
    So pay attention — national stats will decieve you. Try local:
    [Editor’s Note: Be careful, while Medians Are Up, But Don’t Confuse That With Increasing “Prices.” Of course if you’re simply talking volume, as plugged-in people already know: San Francisco Recorded Sales Activity In February: Up 20.2% YOY. And in terms of inventory: SocketSite’s San Francisco Listed Housing Inventory: 3/15/10.]

  7. @J the 30% or so of SF residents who can afford to be home owners are generally under-represented in the roll of unemployed.

  8. It was common for 1992 to be called the bottom of the last correction, but the market didn’t recover until 1996. That period of stagnant nominal prices took nearly as much off of real prices as the initial sharp correction. A similar stagnant period is likely this time until at least 2012, and probably a bit longer. Inflation is low, but that is all it takes.
    There is a big difference between saying there is a ways yet to go and “doom”. Determined shoppers may find good deals that serve them well anywhere along this transition, but the market as a whole is still down. Interest rates are unlikely to stay this low forever, so real recovery is still going to involve some challenges.

  9. “SF residents who can afford to be home owners are generally under-represented in the roll of unemployed. ”
    You are saying they will not only be unaffected, but will actually “demand” more goods… Do the laws of gravity not apply to them in their bubble either???

  10. Wow, I wish I could feel “the pulse of it” and understood that historical data was, umm, well, historical. The data is perfect however when the NAR says that on average, housing doubles every ten years! People who are not buying now should have paid attention in that high school calculus class, but alas are too stupid to understand they should be buying now.

  11. ^^^
    People should have listened to me when I felt “the pulse of it” and called bottom last March.
    You don’t need no calculus class when you can feel it!

  12. You don’t need no calculus class when you can feel it!
    I am feeling something too… help me out with this, I think you are familiar with this neighborhood. RealtyTrac is showing 800 Foerster St. is under duress (1472sq.ft., ~$890k owed), with a tentative auction date of 4/20. Looks like this was an inheritance used as a piggy bank.

  13. Oh that brings it back. Over 500 a foot on Foerster? Good luck. Brings me back to how some scorched earth bears, now long gone (RIP), loved themselves some Foerster street “comps” a little while back. I think they definitely loved it a lot more than the people who have to drive upon it daily. Such an odd width. Not fun. Definitely not good for the amount of traffic it gets. Meanwhile Miraloma Park itself just saw 1 Malta Drive get into contract at a $1.345M list price after about three weeks. The neighborhood is averaging 587 a foot in the last six months. But Foerster? Potentially one of the tougher sells.
    [Editor’s Note: As a point of reference, Miraloma Park appears to have been averaging well over $650 a square foot in 2008, around $560 per square foot in the first six months of 2009, and around $600 per square foot over the last six months of 2009. A sale at asking for 1 Malta would be at $538 per square.]

  14. No calculus class required neither to see RE potentially going into a second dip when the Government takes the place of zombifies banks buying mom and pop’s mortgages.
    This might take 20 years to unwind like in Japan but as long as it looks like a bottom, why not cheer on last year’s blip? The spruce goose hasn’t finished landing. No calculus class for seeing that neither…

  15. Just to add a little more fuel to the fire.
    The governor is about to sign a bill that opens up additional tax credits to $10,000 to first time buyers of existing homes and any new home purchase starting May 1st.
    What people need to realize is that government, for right or wrong, will not allow real estate to drop another 20%. They feel its the key to the recovery of the economy. I’m going out on a limb here, but 2010 will be the bottom of the real estate market. My logic simply is continuing government intervention. The stock market, jobs market, and nearly almost any market is tied to the real estate market. Its a symbiotic relationship. Its a government out of control that will manipulate everything in your life. If you need proof, take a look at the monstrosity of the health care bill that was approved. 1/4 of our economy is now controlled by a small group of people who are out of touch with society. If you need further proof, take a look at all the unnecessary bailouts that happened in the moronic Bush and idiotic Obama administration.

  16. I agree conceptually with Mr. Jones. But as I’ve said before, don’t assume our benevolent central planners will be able to keep this up perpetually. They’ll definitely try. But we’re the biggest debtor on planet earth, and there’s only so much real global wealth out there willing to be sacrificed so that we can play extend & pretend with our real estate market.
    The key here is borrowing cost, i.e. interest rates. Anything that pushes them up hurts the artificially engineered stabilization we’re seeing today. And there are a lot of exogenous factors that can do that. In any event, recent government actions haven’t actually fixed anything to my knowledge. We’re just feeding the drunk more beers so he stops convulsing. I don’t call that a recovery.

  17. does anyone here think we’re in early 2004 when multiple bids started happening, and then spread to every segment of the market? i don’t. yes, there were 16 offers on one home in Portola asking $515k and selling for $613k. but a few blocks away another at $500k sold for $500k, and then another couple of blocks away an REO sits untouched at $305,000.
    the above does feel a bit like late ’03 early ’04… any 16-offer $100k-over bidding war creates 15 “losers” who might bid up the next property. but I still don’t see it spreading. not unless mass euphoria of “real estate will go up forever” combined with anyone who can breath can get a loan.
    but are we at the bottom? there’s definitely strong arguments for and against as seen in this and virtually every other thread on SS. but even if i believe we are at the bottom – and i’m on the fence on this one – i don’t see anything but a bumpy bottom ride for a couple of years.

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