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."

Home Prices

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"