Existing-Home Sales Decline 8.4%
As Median Prices Falls From 2006
Consumer Confidence Drops
JEFF BATER and LAURENCE NORMAN / Wall Street Journal 24apr2007
Existing- Home Sales
Annual rate, in millions of units, seasonally adjusted
Source: National Assoc. of Realtors
Index stood at 100 in 1985, its base year.
Source: Conference Board
WASHINGTON — Existing-home sales took the biggest tumble in 18 years during March as poor weather struck demand.
Meanwhile, U.S. consumer confidence fell significantly in April, with a reverse in consumer optimism about present conditions leading the decline, according to a report released Tuesday.
Home resales fell to a 6.12 million annual rate, a 8.4% decrease from February's revised 6.68 million annual pace, the National Association of Realtors said Tuesday. February's rate was originally estimated at 6.69 million.
The median home price was $217,000 in March, compared with $213,600 in February. The March price was 0.3% below $217,600 in March 2006.
The 8.4% drop was the sharpest since 12.6% in January 1989. The NAR blamed bad winter weather. "For the last couple of months we've been expecting a weather 'hit' on home sales finalized in March," NAR chief economist David Lereah said. The drop in existing-home sales followed three increases in a row. Favorable weather in late fall and early winter had helped elevate demand.
"There is no question whether the weather jerked around these numbers," wrote Ken Mayland, president of ClearView Economics. "Remember: existing home sales reflect closings, which can follow purchases by a month or more. Earlier month existing home sales results reflected purchases made during the unusually warm weather in November, December and the first half of January. Some of the truly crummy weather conditions of February crept into the March sales results."
The March home resales level was below Wall Street expectations of a 6.42 million sales rate for previously owned homes. Lereah said a decline in subprime lending volume might have had a hand.
"It's too early to measure a significant impact from tighter lending standards, which should moderately dampen activity, but we're still looking for existing-home sales to gradually improve during the last half of 2007," he said.
The average 30-year mortgage rate was 6.16% last month, down from 6.29% in February, according to Freddie Mac.
Inventories of homes fell 1.6% at the end of March to 3.75 million available for sale, which represented a 7.3-month supply at the current sales pace. There was a 6.8-month supply at the end of February, revised from a previously estimated 6.7 months.
Sales fell in all four regions of the U.S. Demand dropped 10.9% in the Midwest, 8.2% in the Northeast, 9.1% in the West, and 6.2% in the South.
Decline in Consumer Confidence
The Conference Board, a private research group, said its index of consumer confidence for April moved to 104.0 compared with the upwardly revised 108.2 seen in March. It was the second monthly decline in a row. Economists had expected the April reading to drop to 105.0, according to a survey conducted by Dow Jones Newswires.
March's reading was originally reported at 107.2.The present situation index, a gauge of consumers' assessment of current economic conditions, fell to 131.3 from an upwardly revised 138.5 in March. It was the first decline in six months.
Consumer expectations for the state of economic activity over the next six months slipped to 85.8 in April from an upwardly revised 87.9 the prior month.
"Unlike the decline in March, which was solely the result of apprehension about the short-term outlook, this month's decline was the combination of weakening expectations and a less favorable assessment of present-day conditions," said Lynn Franco, director of the conference board consumer research center.
Ms. Franco said rising gas pump prices "continue to play a key role in dampening" expectations. She added that "the decline in the Present Situation Index...warrants monitoring in the months ahead, as further declines would suggest a softening in growth."
"Higher gas prices are the problem here, just as they were at the previous low for the index last year," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.
Survey respondents calling current economic conditions "good" fell to 26.5% in April from 28.6% in March. Those saying conditions were "bad" lifted to 15.0% from 14.5%.
Consumers' views on the labor market also declined, with those calling jobs "plentiful" dropping to 27.8% from 30.3% the prior month. Those describing jobs as "hard to get" lifted to 20.4% from 18.9%.