Home sales below expectations

Peter Boockvar at the The Big Picture had a good summary on the home sales results that came out yesterday.  In my mind housing has yet to bottom.  We get various starts and stop signals which give people a false sense of recovery.  Bottom line right now there is no sight of a sustained recovery in housing.

The one area of the market related to housing that is gaining traction is the home improvement space.  People aren't buying houses instead opting to rent which creates product demand for those people renovating houses to rent.  You also have people staying in their current houses rather than moving thus creating demand for remodeling projects.  You can see support for this case in the Home Depot results reported this week that beat expectations solidly.  Lowe's reports on Monday.

Via the Big Picture

• Existing Home Sales in Jan totaled 4.57mm annualized, below expectations of 4.66mm and Dec was revised lower by 230k to 4.38mm. Taking the two months together and sales were 320k less than initially expected. However, because the number of homes for sale continues to shrink, to the lowest since May ’05, months supply fell to 6.1 from 6.4 to the smallest since April ’06. The median home price fell 2% y/o/y to $154,700, the cheapest since Nov ’01. Distressed sales totaled 35% of the total (22% foreclosures, 13% short sales) vs 32% in Dec and 37% in Jan ’11. Contract cancellations totaled a large 33%, unchanged from Dec but up from 9% in Jan ’11 as mortgage apps get denied and appraisals come in below the agreed upon price. A key for sales and pricing looking out over the next few months will be whether we’ll see a flood of foreclosures now that banks have settled with all the state AG’s, possibly clearing out the backlogs that have been built up when the aftermath of robosigning froze the process in many states.