The February Existing Home Sales Happened Pre-Wuhan
Strong Sales Should Bolster Retail Sales into March and April
The Legacy Media is hyper-focused on the Wuhan Virus to the detriment of paying attention to the economic news that has been released recently. The Construction sector is mobilizing, as was referenced in the February Jobs Report and the December JOLTS Report (The January report will be released March 17th.) Unemployment claims are down, jobs and wages are up. Full-time jobs are rising. More people are qualifying for mortgages. The Wuhan Virus Mania started well into March. We should continue receiving solid data. We already received astronomical new home starts data for February. What was recorded and what was reported for Existing Home Sales?
What was expected from the Existing Home Sales Data during February? Inventory should have improved month over month for the existing homes market.The month to month data indicates a level between 1.46 and 1.474 million units units. The annual data indicates a range of 1.617 to 1.683 million. It was thought that 1.500 million units would be out of reach.
This February popped to 1.471 million units - Better than last month, fewer than last February. Inventory normally bottoms during December and peaks during June. The lack of inventory means that, according to the REALTORS, that we have a 3.1 month supply of homes.
We should have seen the most February Sales since February 2007. Last February we were still dealing with the Government Shutdown. The loan approval process seems to have been restricted. Sales were expected to fall between 311,000 and 319,000 based on month to month growth. Sales were expected between 330,000 and 349,000 based on February to February growth rates. A number of 320,000 was well within reason. Pent up demand meant 325,000 to 330,000 units was possible.
This February we recorded 335,000 units sold - the most since February 2007. We saw a "barrier" at 320,000 units during February between 2008 and 2019. The most we had sold was 319,000 units during February 2018. By comparison, we sold 347,000 units during February 2007 as the real estate market was cooling down from their 2005 and 2006 levels. The current year sales data is 653,000 units compared to 671,000 during 2007. This is the highest year to date level during February since February 2007.
A new February Record Average Sales Price was expected. Last year's $288,500 was a record for February. Shelter inflation has been running at over 3% for an extended period of time. Last month we had an ASP of $302,700. The ASP tends to rise month to month and year to year during February. The month to month data was projecting an ASP of $303,000 to $305,000. The February to February data was projecting and Average Sales price of $297,000 to $305,000. It was expected that we would see a February record ASP between $300,000 and $305,000.
The Average Sales Price jumped 6.1% from February 2019 to $305,800 - A New February Record. The average sales price rose from last month's January Record of $302,900.This means that if you bought a home during the past 10-15 years, even the past 1-2 years, you should be able to sell your home for more that what you paid. All real estate is local.
We have had pent up demand for existing homes since the recession. The problem was that average sales prices remained below their historic levels for a protracted period of time. It wasn't really until 2017 that the average sales price exceeded the pre-recession average sales price levels of mo st months. People are now hearing about how average sales prices are increasing. We have seen elevated levels of loan applications recently. They are also hearing about record low mortgage rates. The two situations combined should spur more people to want to move from one house, or condominium, to another house or condominium. They may even want to build a new home. New crops of homes are springing up in farm fields around the country.
All real estate is local. Home prices vary on the sate, county, city, and subdivision in which you live. They vary based on square footage, amenities, and condition. Some are overpriced. Some are "underpriced." Some are priced just right. Some buyers are over-motivated and will pay a higher price for a home than someone else. Some sellers are "undermotivated" and will "wait for their" price, only to have to drop their price every month until a motivated buyer meets the very motivated seller. Contact you local REALTOR or some builders to find out what is available. Contact a lender to be pre-approved for a mortgage.
This data is looking good. It is possible that we may see some sluggishness if the Wuhan Virus Crisis lasts much longer. The thing to remember is that we have had more infections, hospitalizations, and deaths from the annual flu than we have seen from the Wuhan Virus.
The Wuhan Virus is a Coronavirus, named for its shape. The common cold is a coronavirus. Unfortunately, viruses normally have to run their course.
It's cold and flu season. It is also that time of year when new homes and for sale signs pop up like daffodils. The Stock Market is not the Economy. We can expect stronger data for a while.
It's the Economy.
Copyright ©2020 “Existing-Home Sales Jump 6.5% in February” NATIONAL ASSOCIATION OF REALTORS®. All rights reserved. Reprinted with permission. March 20, 2020 https://www.nar.realtor/newsroom/existing-home-sales-jump-6-5-in-february
unity Copyright © Jack Dunn All rights reserved.