Instant View: Existing home sales jump in March

NEW YORK (BestGrowthStock) -U.S. existing home sales jumped 6.8 pct in March as Americans rushed to take advantage of a tax credit for home buyers, but activity remained severely depressed from levels preceding the country’s sharpest housing downturn in modern history.

Sales rose 6.8 percent to an annual rate of 5.35 million units, the National Association of Realtors said on Thursday. Forecasters in a Reuters poll had been looking for a more subdued 4.6 percent increase.

The nationwide median home price was only slightly higher than a year earlier at $170,700.

The supply of available homes stood at 3.58 million units, or 8.0 months.

The US Federal Housing Finance Agency also reported that home prices fell 0.2 percent in February from January and were down 3.4 percent in the 12 months through February 2010.

COMMENTS:

JIM AWAD, MANAGING DIRECTOR AT ZEPHYR MANAGEMENT IN NEW YORK

“Sales were moderately better, which means that we’re reinforcing the case that we’re getting a gradual bottom in housing. Despite that, enthusiasm will be tempered by the prospect of more foreclosures ahead. This is not a market-mover.

“The earnings season is powerful, but a lot may be priced in. It’s also hard to gauge the impact of Goldman, financial regulation and Greece, especially after the big gains we’ve seen. Right now the markets are in a tug of war between earnings, which have been good, have Greece, Goldman, etc, which are negative.”

LINDSEY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK

“Once you get past the first-time homebuyer’s swell, we’re seeing organic growth here as well. The spring selling season from here on out is going to be the bottom of prices. Inventories peaked back in mid-July. This is pretty much the bottoming of home prices. As we see more and more stability in prices on a monthly basis, those buyers who were on the sideline are going to start to move back in and not worry about the value of their asset dropping overnight.

“Small steps in the right direction–we’re seeing optimism return both on the demand side and the builder’s side.

“There’s still quite a ways to go before we can say that residential investment is contributing to growth again.

“A lot of volatility here–the market is still uncertain if we’re going to see stability in the market.”

MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK, NEW YORK:

“This was indeed a strong report. While we had expected a pop up in sales, it was above our expectations. It shows the spring selling season kicked off to a strong start. The gains were broad an not focused on one region, which shows overall positive sentiment. it seems like the tax credit boosted sales as well as the return to warm weather in March. We are expecting home sales activity to continue increasing through June, which is when the contracts need to be closed in order to get the tax credit. Overall this is indicative of an improving economic environment and favorable affordability.”

JOE MANIMBO, CURRENCY TRADER, TRAVELEX GLOBAL BUSINESS PAYMENTS, WASHINGTON D.C.

“The dollar is getting a nice benefit from U.S. data today, both the jobless claims data we saw earlier today and the housing data. That’s helping to contrast with the debt worries in the euro zone, resulting a broadly stronger dollar.

“The encouraging housing data bolstered hopes for a sustainable recovery in the housing market. With Wall Street still in deeply negative territory, we’re seeing the dollar benefit as investors look for shelter.

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO., GREENWICH, CONNECTICUT

“The data is not really moving the market today as sovereign debt concerns resurface. We have had a market that has had a pretty good run, got actually back to the recent highs intraday yesterday and then backed off. So there’s some normal hesitation after having this snap back.”

GUS FAUCHER, DIRECTOR OF MACROECONOMICS, MOODY’S ECONOMY.COM, WEST CHESTER, PENNSYLVANIA

EXISTING HOME SALES: “You are getting some boost from the first-time home buyer, but it is likely to be temporary. You are seeing some people putting homes on the market. You could see some weakening after the first-time home buyer credit expires at the end of the month.”

FHFA HOME PRICES: “I think there is some stabilization but we could see another drop in the near future through the fall s due to the expiration of the first-time home buyer credit and more foreclosures moving through the pipeline.

Based on the Case Shiller indexes, we expect another 5 percent drop between now and the end of 2010, or a 34 percent drop from peak-to-trough decline.”

BOB WALTERS, CHIEF ECONOMIST, QUICKEN LOANS, LIVONIA, MICHIGAN:

“After a three-month slide, existing home sales staged a comeback in March. Buoyed by the unseasonably warm weather, home owners were out en masse scooping-up bargain-priced real estate. Adding to the increase in sales is the looming deadline of the government’s first-time homebuyer tax credit, which is set to expire at the end of this month.”

PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER AT OAKbROOK INVESTMENTS LLC IN LISLE, ILLINOIS.

“Home sales were good, the bigger issue is the jobless claims number. And the other side of it, home sales are kind of holding their breath on because they know some of the mortgage assistance stuff is winding down. So that is probably inflating the current number but who knows what it is going to be on the other side.”

WARD MCCARTHY, CHIEF FINANCIAL ECONOMIST AT JEFFERIES & CO. IN NEW YORK

“It’s a little stronger than expected but it kind of fits what we’ve already seen with the housing starts and the permits data, which also bounced back a little bit.

“I think what we’re seeing is that the housing sector is in the process of stabilizing on a national level. We really want to get through this selling season, which is really focused in Q2, before you can say that with 100 percent certainty but that does appear to be the case.

“I think it’s going to be some time before we see any kind of a significant recovery in housing but the good news is it looks like the worst is over and houses are starting to move again.”

The bond market has got other things to sink its teeth into right now. There’s death and destruction in the Greece bond market today.”

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The report showed a good increase in sales, but the factor that dampens enthusiasm is that the inventory of unsold homes is rising so any pickup in house buying is matched by an expansion in the number of houses for sale. The sellers conclude the market is less unhealthy and put their house on the market which is fine in normal times, but right now it’s evidence that the un-seen inventory probably remains large and that tends to quash price improvement. It’s not bad news, but it could be better given how much the market has fallen.

CAMERON FINDLAY, CHIEF ECONOMIST, LENDINGTREE.COM. CHARLOTTE, NORTH CAROLINA:

“These positive results are not unexpected given the large spike we saw right before the end of the last Tax credit where sales rose from about 5.1 million units in August 2009 to 6.5 million units in November 2009 before declining back to 5 million units in February 2010, a virtual drop off a cliff post the tax incentive. These forms of government incentives clearly work, they provide a positive impact in a meaningful way but only for a short period before falling back to levels at or below prior estimates, this tax credit is like the ‘performance enhancing drug’ of housing, we are however hopeful it doesn’t kill real sustained growth in an effort to achieve short term improvement.”

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Instant View: Existing home sales jump in March