by Calculated Risk on 5/19/2011 10:00:00 AM

The NAR reports: April Existing-Home Sales Ease

Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, eased 0.8 percent to a seasonally adjusted annual rate of 5.05 million in April from a downwardly revised 5.09 million in March, and are 12.9 percent below a 5.80 million pace in April 2010; sales surged in April and May of 2010 in response to the home buyer tax credit.
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Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, which represents a 9.2-month supply4 at the current sales pace, up from an 8.3-month supply in March.

Click on graph for larger image in graph gallery.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in April 2011 (5.05 million SAAR) were 0.8% lower than last month, and were 12.9% lower than in April 2010.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 3.87 million in April from 3.52 million in March.

Inventory is not seasonally adjusted and there is a clear seasonal pattern with inventory peaking in the summer and declining in the fall and winter. Inventory will probably increase over the next several months.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Inventory is not seasonally adjusted, so it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory - so the increase in months-of-supply during the Spring is expected.

Although inventory increased from March to April (as usual), inventory decreased 3.9% year-over-year in April from April 2010. This is the third consecutive month with a YoY decrease in inventory.

Inventory should increase over the next few months and peak in the summer (the normal seasonal pattern), and the YoY change is something to watch closely this year.

Months of supply increased to 9.2 months in April, up from 8.3 months in March. The months of supply will probably increase over the next few months as inventory increases. This is much higher than normal.

These sales numbers were below the consensus of 5.2 million SAAR, but the key number is the year-over-year change in inventory, and that suggests less downward pressure on house prices even though inventory is well above normal (I'll have more later - here is the NSA chart)

UPDATE: Some people misread what I wrote. There is STILL downward pressure on house prices from the high level of inventory, but the year-over-year decline suggests "less" downward pressure. "Less" does not mean "none". Of course there is also downward pressure from all the distressed sales.