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Thursday, March 28, 2024

Existing-Home Sales Lose Momentum in April

Courtesy of Doug Short.

This morning’s release of the March Existing-Home Sales disappointed expectations, slipping to a seasonally adjusted annual rate of 5.04 million units from an upwardly revised 5.21 million in March (previously 5.19 million). The Investing.com consensus was for 5.24 million. The latest number represents a 3.3% decrease from the previous month but a 6.1% increase year-over-year.

Here is an excerpt from today’s report from the National Association of Realtors.

Lawrence Yun, NAR chief economist, says sales in April failed to keep pace with the robust gain seen in March. “April’s setback is the result of lagging supply relative to demand and the upward pressure it’s putting on prices,” he said. “However, the overall data and feedback we’re hearing from Realtors® continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes.”   [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 is available in the St. Louis Fed’s FRED repository here.

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Over this time frame we clearly see the Real Estate Bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the Great Recession. The latest estimate puts us back to the general level around the turn of the century.

The Population-Adjusted Reality

Now let’s examine the data with a simple population adjustment. The Census Bureau’s mid-month population estimates show a 15.5% increase in the US population since the turn of the century. The snapshot below is an overlay of the NAR’s annualized estimates with a population-adjusted version.

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Existing-home sales are 3.3% below the NAR’s January 2000 estimate. The population-adjusted version is 15.6% below the turn-of-the-century sales.

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