Existing Home Sales Jump, Prices Drop

Existing home sales jumped 2.9% in April, while median home prices continued to fall.
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Housing is ground zero for much that ails the markets. So when the National Association of Realtors put out their existing home sales figures this morning, investors listened. What they heard was a true mishmash of information.

Today, the industry group, the self-dubbed "The Voice for Real Estate," trumpeted that existing home sales, its benchmark metric, rose 2.9% in April. That just beat expectations.

Here's the bad news: The 2.9% number is still down 3.5% from the year ago period. And though first-time homebuyers, armed with $8,000 tax credits, are leading the charge, some of the uptick came from repeat buyers who typically hit the market in the spring.

Unsold home inventory rose nearly 9%, though that may be largely seasonal as well, according to Lawrence Yun, NAR's chief economist. Looking ahead, a bunch of foreclosed homes are hitting the market and a glut of distressed homes need to be cleared, according to Yun.

But wait, here's a little more good news: Though high price home sales are seriously lagging, Yun said "most of the sales are taking place in lower price ranges and activity is beginning to pick up in the midprice ranges." It also helps that mortgage rates for conventional mortgages are at historical lows, according to Freddie Mac.

As for inventory, Yun said buyers are flocking like moths to a flame toward "deeply discounted prices, and are bidding up many foreclosed listings." The current median home price fell to $170,200 in April, down 15.4% from 2008 levels. But the NAR took pains to explain that away, saying that distressed home prices are creating a distorted image.

Existing home sales jumped in every region except in the Midwest. There, sales dropped 2% and median prices came in at $138,800, a double-digit percentage slip from the previous year.

As important as the housing numbers are, it is, of course, only one month. Just yesterday, the S&P's Case-Shiller Home Price Index showed that prices fell 19.1%. That gloomy news was a record, they said. But by afternoon, many investors had already forgotten the number, instead latching on to consumer confidence numbers and retail stocks.

Tomorrow, investors will have more information to chew on...and move on from. The Commerce Department will release its new home sales figures.

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