Saturday, March 24, 2007

"Existing Home Sales Rise in February"--BUT...

The report says that existing home sales rose in February.

There's less to that than the headline suggests.

Inventory is at a record levels for February (30% above Feb 2006).

Existing home sales are reported at the close of escrow. This means these contracts were mostly signed in December and January. So these numbers are prior to the subprime implosion of mid-February.

That "inventory" situation is serious.

Total housing inventory levels rose 5.9 percent at the end of February to 3.75 million existing homes available for sale, which represents a 6.7-month supply at the current sales pace compared with a 6.6-month supply in January. Raw inventories peaked last July at 3.86 million, and supplies topped at 7.4 months in October.

And according to the Guru (Calculated Risk), inventory could hit 8 months in July/August.

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