Hope seen, despite home sales downturn

Realtors say home resales fell 3% in March, but analysts point to signs of a stabilizing market.

NEW YORK (CNNMoney.com) -- Sales of existing homes fell in March, according to an industry report released Thursday, but analysts say the housing market is showing signs of stabilization.

The National Association of Realtors said that existing home sales fell last month to a seasonally adjusted annual rate of 4.57 million units, 3% lower than the downwardly revised rate of 4.71 million in February.

March sales were down 7.1% year over year, and came in weaker than the 4.65 million rate forecast by analysts surveyed by Briefing.com.

Despite last month's decline, existing home sales appear to be stabilizing, according to Ian Shepherdson, economist at High Frequency Economics.

"Sales are volatile month-to-month, but the trend appears to be flattening off," Shepherdson said in a research note.

Single family home sales, which are considered the core of the market, fell at a 10% annualized rate in the first quarter of 2009, after a 17.4% drop in the last three months of 2008. At the current sales pace, existing-home sales will be down "only" 2% in the second quarter, according to Shepherdson.

First-time buyers made up 53% of existing home sales in March. Charles McMillan, NAR's president, said first-time buyers are "crucial" to a recovery in the overall housing market.

"The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down," McMillan said in a statement.

Meanwhile, sales of "distressed properties" accounted for over half of all transactions in March. Foreclosed homes typically sell for 20% less than traditional homes, according to NAR.

"Clearly foreclosure activity is driving the marketplace," said Adam York, an economist at Wachovia Economics Group, in a research report. "Buyers are clearly looking for 'bargains,' if they are looking at all."

Existing home sales in the West declined 4.2% in March. Sales in the South and the Northeast also fell, while sales in the Midwest were unchanged.

The national median existing-home price was $175,200 in March, up 4.2% from $168,200 in February. Still, the median existing-home price was down more than 12% since March 2008, when it was $200,100.

The total number of existing homes on the market at the end of March fell 1.6% to 3.74 million units. At the current sales pace, it would take an estimated 9.8 months to sell that inventory of properties. That's up slightly from 9.7 months in February and January.

"The inventory overhang has stabilized too," Shepherdson said. But the number of existing homes on the market remains historically high, and prices will continue to fall rapidly "for the foreseeable future," he said.

First Published: April 23, 2009: 10:06 AM ET
By Ben Rooney, CNNMoney.com staff writer
Last Updated: April 23, 2009: 1:52 PM ET

Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.

New home sales show signs of revival

Despite a decline in March, the annual rate remains above what economists expect after an even stronger than originally reported February.

NEW YORK (CNNMoney.com) -- Sales of newly constructed homes are showing indications, ever so slight, that the housing decline may be near an end, a government report showed Friday.

The Commerce Department said new home sales fell 0.6% last month to a seasonally adjusted annual rate of 356,000. But that was from a rate of 358,000 in February that was revised up from the originally reported at 337,000 -- the level economists were expecting for March.

The net revision to the prior three months equals an increase of 31,000 units, according to Wachovia Economics Group.

"This is clearly a better-than-expected number," said Michael Larson, a real estate analyst at Weiss Research. "Technically, yes, sales declined, but the last three months were revised higher and the raw number came in better than expectations."

"All signs are pointing to stabilization in market conditions, which is due to lower prices," Larson said. "We still have a problem with unemployment, and that's why any rebound we see will be muted."

Another signs of a bottom in the market: The estimated number of new homes for sale at the end of last month was a seasonally adjusted 311,000, according to the Commerce Department. Last month, it was 328,000 unsold homes.

At the current sales pace, it would take 10.7 months to sell through that inventory, according to the report. That's down from the previous month, when the estimated months of inventory was 11.2, and was nearly 2 months below January's level of 12.5.

"While the inventory correction will likely overshoot to the downside, we are getting closer to stability in the marketplace," said Adam York, economist at Wachovia Economics Group, in a research note. He added that new home inventory is now approaching late 1990s levels.

"As we have long said, getting the new home market back into equilibrium is an important precursor to broader housing market improvement," York said.

The median sales price of new houses sold in March was $201,400, down 3.5%from the revised $208,700 in February and 12.1% from March 2008, when it was $229,300.

"Median prices fell for the third straight month as builders fought the rising tide of foreclosure sales for buyers' attention," said York.

As buyers bargain shop for deals on foreclosed properties, homebuilders have drastically scaled back production to meet falling demand.

On Thursday, the National Association of Realtors said sales of existing homes fell 3% in March, after an unexpected rise the month before.

First Published: April 24, 2009: 10:17 AM ET
By Ben Rooney, CNNMoney.com staff writer
Last Updated: April 24, 2009: 11:31 AM ET

Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.