Housing Slump Continues as Existing Home Sales Fall -3.8% MoM in June

Existing home sales fell a larger than expected -3.8% MoM (consensus -2.1%) in June. Existing home sales have dropped every month since February, and now stand at a pace last observed in 2002. In addition, last month's decline was revised slightly lower to -.5% MoM from the originally reported -.3%. The strength in condos seen last month eroded in June as condo sales fell almost twice as fast as single-family sales fell, declining at -6.3% MoM versus -3.5% MoM.

Versus a year ago, total sales have fallen -11.4% YoY, with single-family sales having fallen -12.1% MoM, and condos declining more slowly at -6.6% YoY.

Inventory held steady at 8.8 months supply, based on the current sales rate, and remains at the highest level of the year. By category, single-family inventory inched higher to 8.7 months, and condos fell by half a month to 9.2 months. The actual supply of homes available for resale fell 4.2% to 4.2 million in June.

Median home values rose +.3% YoY (+3.3% MoM) to $230,100 - the first year-over-year increase in 11 months. Most of the gain was again in condo prices which rose 2.6% YoY. Caution should be used in watching median home prices as the mix of sales between regions and home types can skew the results month-to-month. But, the increase in price may indicate that as subprime borrowers find loans more difficult to acquire, fewer lower priced homes are purchased, which is pushing the median price higher due to the mix of homes sold.

Regionally, the Northeast saw the biggest decline at -7.3% MoM, followed by the West at -6.8% MoM, then the Midwest at -2.8% MoM, trailed by the South at -1.7% MoM. Not seasonally adjusted median house prices gains showed gains of $6-8,000 in the Northeast, Midwest and South in June versus May. The West actually experienced a $2,000 decline in median home prices versus the prior month.

Existing home sales represent finalized sales of 'used' homes at contract closings. Pending home sales indicate initial purchase agreements, and usually lead existing home sales by 1-2 months. Pending home sales fell to a five year low in May as higher interest rates, tighter credit conditions, and falling home prices have discouraged purchases. Existing homes sales account for about 85% of total home sales.

The housing market has not yet bottomed.