Implications: Existing home sales pulled back in February, after increasing substantially in the past three months. Despite overall economic improvement – including higher wages and more private-sector jobs – credit conditions remain a major headwind for home sales. Anyone who has taken out a mortgage lately knows the lending process can be brutal, even for those willing and able to make a down-payment of 20%. By contrast, rental vacancies are falling fast. We are not concerned about the small rise in inventories in February. Inventories normally rise in February, as the spring selling season approaches, and are still down 1.2% compared to a year ago. Although the data will zig and zag from month to month, we expect the sales of existing homes to eventually reach the long-term trend of 5.5 million units annually. With housing affordability at the highest level in at least 40 years, the market for homes is poised to improve.
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Posted on Monday, March 21, 2011 @ 12:10 PM
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