Real Estate: Home Sales Debate
Existing Home Sales
The latest existing homes sales figures were, in a word, depressing.
Existing home sales fell 8.4% in March vs. a month ago, the biggest decline since 1989. Compared to a year ago, sales were 11.3% lower. At 6.12 million units on an annulaized basis, it is the lowest level since 2003.
The median house price fell 0.3% to $217, 000, while inventories were down 1.6% from February, small consolation.
Mike Larson, Moneyandmarkets.com real estate analyst, and Stephen Stanley, chief economist at RBS/Greenwich Capita, debated the data.
Stanley, who thinks the worst is almost over for the housing industry, admits the figures are " a little bit worrisome," but adds the data is a bit deceiving because they "tend to lag a bit"
Bad weather earlier in the year may also have distorted the figures.
The subprime meltdown is something we have to look out for" in the months ahead, but Stanley doesn't think it will have much of a knock-on effect. He's ruling out another "Big letdown" in prices, saying sales won't go much lower.
You won't find any such optimism from Larson, who says these are "very disappointing sales figures."
"The real bugaboo as far as I am concerned is supply", he says, adding it is "very, very high vs. history."
"We need to see prices come down further, " Larson says with considerable conviction "to a level the average family can afford" without unusual financing.
As for a recovery, keep waiting. Sometime in 2008 the "situation will be better."
The S&P/Case-Shiller home price index released Tuesday showed prices are down 1.5% in 10 major cities in the past year, the fastest decline in 13 years.
If there was any good news, it is that there has been an unwinding of the housing boom without a crash, It has been "a very orderly unwinding," says Blitzer, but it will "go on for awhile longer"
The March improvement was just half what analysts had expected and still left the sales pace 23.5% lower than a year ago as the housing industry continues to go through a painful adjustment after an extended boom period.
The rise in sales activity helped to lift prices, with the median sales price increasing to $254,000, a gain of 6.4% compared to a year ago.
David Michonski, Coldwell Banker Hunt Kennedy CEO, and Hugh Moore, Guerite Advisors partner discuss the market with CNBC's Mark Haines.
Michonski says there's been no price appreciation in the last two years, while underlying costs have continued to go up, which means the time to buy is near. He says buy now with interest rates favorable and inventories high.
Moore says it still a year to 18 months from the bottom as real estate corrections typically take 27 months from peak to bottom. "We're about half way through this housing correction." Housing starts typically fall 50% during a correction and thus far they are down about 30%.