Existing home sales, while in-line with expectations at a seasonally adjusted annual rate of 5.02 million units, are still disappointing.
Sales have now dropped three months in a row, after peaking at 6.49 million units in November. The debate on the effect of the first time homebuyer tax credit, which initially expired in November (and was subsequently extended to April of this year), is now over: it clearly had the effect of "front-end loading" existing pent-up demand for housing.
Inventories popped up to 8.6 months supply, the third monthly increase in a row.
KB Home also had a disappointing earnings report this morning, with a larger loss than expected. While impairment charges (for lower land values, mostly) were notably lower than last year, a sales increase of only 5 percent was well below most analyst estimates.
Bottom line: we need to see improvement in housing, as well as jobs, for the markets to move to the next phase.
New home sales are tomorrow.
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