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Last Update: 22-Feb-12 10:43 ET
Gains in Existing Home Sales Mask Large Negative Revisions
After yet another substantial negative revision to existing home sales data, home sales showed a modest improvement in January. Sales increased from a negatively revised 4.38 mln (from 4.61 mln) in December to 4.57 mln in January. The Briefing.com consensus expected sales to increase to 4.63 mln.
While the increase in sales in January follows the trend of improving housing market conditions, the data from the National Association of Realtors (NAR) continue to suffer from large negative revisions. Given that the pending home sales index and the Mortgage Bankers Association Mortgage Purchase Index both contracted for January, it would not be surprising if the January sales number was overstated and is revised lower next month.
Therefore, it is very difficult to determine the actual state of the market until the volatility in the revisions lessens considerably.
The details, however, are not encouraging.
Distressed homes accounted for 35% of January sales, up from 32% in December but down from 37% in January 2011. Investor sales increased from 21% in December to 23% in January.
Credit conditions remain tight as first-time buyers, which normally account for roughly 40% of sales, only accounted for 33% of all homes purchased in January.
The contract cancelations rate remained the same at 33%. That is up substantially from January 2011 (9%).
Inventory levels continued to fall, dropping from 6.4 months in December to 6.1 months in January.
While the increase in sales in January follows the trend of improving housing market conditions, the data from the National Association of Realtors (NAR) continue to suffer from large negative revisions. Given that the pending home sales index and the Mortgage Bankers Association Mortgage Purchase Index both contracted for January, it would not be surprising if the January sales number was overstated and is revised lower next month.
Therefore, it is very difficult to determine the actual state of the market until the volatility in the revisions lessens considerably.
The details, however, are not encouraging.
Distressed homes accounted for 35% of January sales, up from 32% in December but down from 37% in January 2011. Investor sales increased from 21% in December to 23% in January.
Credit conditions remain tight as first-time buyers, which normally account for roughly 40% of sales, only accounted for 33% of all homes purchased in January.
The contract cancelations rate remained the same at 33%. That is up substantially from January 2011 (9%).
Inventory levels continued to fall, dropping from 6.4 months in December to 6.1 months in January.
