Tuesday, August 24, 2004

Sales of Existing Homes Took a Breather in July


From The Wall Street Journal Online

Aug. 24, 2004 -- NEW YORK -- Sales of existing homes declined in July, as the resilient U.S. housing market appeared to pause for a breather as mortgage rates remained relatively low.

The National Association of Realtors said Tuesday that existing-homes sales fell 2.9% to a seasonally adjusted annual rate of 6.72 million units last month, from a downwardly revised 6.92 million unit pace in June. June resales had previously been reported at a 6.95 million annual rate, a 2.1% rise from May's record level.

"There are those that talk about price bubbles and I continue to tell you there are no price bubbles," said NAR Chief Economist David Lereah. "Prices are surging, particularly in the West, where they rose 17%. We have a supply problem ... inventories have been depleted." The group now expects U.S. sales will top 6.4 million in 2004.

The July report failed to meet Wall Street expectations. However, Mr. Lereah said July's numbers were the third best annualized rate of home resales ever and the first drop since January. Analysts had expected existing-home sales to decline 2.2% to a 6.95 million rate.

[existing-home sales]

Mortgage rates rose sharply in May and June, but have settled well below 6.0% in recent weeks to an average of 5.81% last week, according to a survey compiled by Freddie Mac. The average interest rate for a 30-year fixed-rate mortgage hovered around 6.0% for most of July, compared to an average of 6.29% in June and 6.27% in May.

"There is no reason yet to expect any further significant decline in activity; with mortgage rates back below 6% … there is little chance the housing market will weaken in the near-term," wrote Ian Shepherdson, of consulting firm High Frequency Economics, in a note to clients. "Supply is still tight too, so prices will keep rising, though perhaps at a slower rate."

In July, the inventory of existing homes on the market remained stable at 4.3 months, slightly up from a revised 4.2 months in June, the NAR said. The median home price rose to $191,300 in July, compared with a revised $191,000 in June. The average home price edged up to $244,700 from a revised average of $244,500 in June.

Sales of existing homes were down in all regions except the South, where they rose 0.4%. Home resales fell 1.4% in the Northeast, 4.8% in the Midwest, and 6.6% in the West.

Data on new-home sales will be released Wednesday by the Commerce Department. Economists surveyed by Dow Jones Newswires and CNBC expect a 2.3% decrease.

Separately, Redbook Research's latest indicator of national retail sales shows sales down 1% in the first three weeks of August, compared with the same period in July. The report also shows seasonally adjusted sales in the month-to-date period up 1.9% from the same period in 2003. On an unadjusted basis, sales were up 1%.

The weaker tone for sales was attributed by Redbook to Hurricane Charley and the fact that "some retailers also believe that a later Labor Day holiday may be delaying back-to-school activity."

Redbook also noted "Given the large weighting of the discount stores in our model, it was this under-performance that was primarily responsible for the week's poor showing overall."

Discount giants Wal-Mart and Target have both projected weaker sales for August, with Wal-Mart revising its forecast on Monday to say it expected sales in stores open at least a year to be flat to 2% higher. An earlier company forecast had called for sales growth of 2% to 4%.


At 12:17 PM, Anonymous Anonymous said...

People should step away from the banks and keep some of their valuables secure in a an Office Safe or Sentry Safe


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