Courtesy of Doug Short’s Advisor Perspectives.
This morning’s release of the February Existing-Home Sales tumbled from last month to a seasonally adjusted annual rate of 5.08 million units from 5.47 million in January. The Investing.com consensus was for 5.34 million. The latest number represents a 7.1% decrease from the previous month but a 3.9% increase year-over-year.
Here is an excerpt from today’s report from the National Association of Realtors.
Lawrence Yun, says existing sales disappointed in February and failed to keep pace with what had been a strong start to the year. “Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest,” he said. “The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings. However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.” [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.
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 16.3% 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.
Existing-home sales are 2.9% below the NAR’s January 2000 estimate. The population-adjusted version is 15.5% below the turn-of-the-century sales.
For additional perspectives on residential real estate, here is the complete list of our monthly updates:
