Two New Reports Show Housing Exuberance Is Waning
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Further evidence that the real estate boom is moderating came
from the National Association of Realtors last week.
Quarterly figures on existing home sales which include single family houses
and condominium units trended downward for the second straight quarter during
the first three months of 2006.
The sale of existing houses established an all-time record in the third quarter
of 2005 when a seasonally adjusted annual total of 7,180,000 homes changed hands.
That dropped to 6,943,000 during the fourth quarter and has now retreated to
6,797,000 during the first quarter of 2006, a decrease of 2.1 percent both from
the previous quarter and from the first quarter one year ago.
David Lereah, the chief economist for NAR said that "a steady rise in
mortgage interest rates has slowed home sales in higher cost areas,
yet job growth in some moderately priced markets is boosting sales in other
areas. The net effect is a modest decline in home sales for the nation as a
whole, but sales remain historically strong and are providing a solid underlying
base for the overall economy."
Half of the regions in the U.S. showed a decline, most strikingly the West
where sales were down 12.4 percent since last quarter. Sales also declined,
although not as dramatically, in the Northeast for a loss of 2.9 percent. Sales,
however, increased in the Midwest (1.1 percent) and the South had the strongest
performance with an increase of 2.3 percent on annualized sales of 2,707,000.
Some of the losses were dramatic, particularly in those states that had been
the "high rollers" over the past several years. Arizona, for example,
was off 22.2 percent from the sales level of a year earlier and California 19.2
percent. Nevada, Washington, D.C., Florida, Virginia, and Wyoming all had sales
decreases of over 15 percent.
However, 26 states showed an increase of sales since the first
quarter of 2005, most notably New Mexico where existing home sales rose 26.2
percent and Louisiana with an increase in sales of 22.9 percent. NAR did not
opine as to whether any part of the Louisiana sales were due to the effect of
Hurricane Katrina with its victims scrambling to find replacement housing.
Also coming on strong was another Katrina state, Mississippi which was up 17.3
percent year over year. North Carolina was up 17 percent and Arkansas and Tennessee
increased 16.7 and 10.4 percent respectively.
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