End-of-Day Market Update

From Deutsche Bank:  "Financials lead US stocks lower after soft jobless data, hedge fund liquidation news and Bernanke comment on banks, puts bid back into Tsy's, Dollar hits new lows, driving gold/oil to new highs. Credit widens significantly...Fed's Bernanke says not facing 70s style stagflation, but facing more inflation than in 2001. Says expects there will be some bank failures."

From Lehman:  "The treasury market exploded higher on Thursday, as if accounts forgot all about the leap year and decided that they would do their month-end buying on the 28th. GDP came slightly softer than expected, initial claims rose, credit widened, and stocks were soft, which all must have contributed in some way to an 18+ bp rally in 5 year notes. And in terms of flows, it was the same story  that we have been talking about for the past three days, with huge buying from our franchise, from mortgage, real money and fast money accounts. Yes, it was another huge day for commodities, and the dollar got crushed again, but these things simply don't seem to matter to accounts who believe that mortgage selling needs are a thing of the past, that the economy is worsening, and that rates are the place to be....The yield curve was all over the place today, but finishedflatter from 2s to 5s and steeper from 5s to bonds...Thursday's yield changes were roughly as follows:

2 years: -14.0 bp

5 years: -16.5 bp

10 years: -14.4 bp

18 years: -12.5 bp

30 years: -10.3 bp"

From Bear Stearns:  "MBS open up 20bps tighter on the back of servicer related convexity buying. Our first dose of heavy Asian participation fed the euphoria - until we ran out of good news. Rumors of CDO lists, write downs, bank failures...salted the fixed income well. After that every convexity purchase was overpowered by waves of fast money profit taking.  MBS gave up 1/2 of tightening. More recently we have seen core MM selling of the basis. The GN/FN price chart looks like my EKG  GNMA asked SIFMA to raise its conforming LL from 362K to 417K."

From Suntrust:  "The news today has been almost uniformly bullish for bonds. Jobless claims spiked +19k to 373k, indicating a softening labor market.  Q4 GDP came in unchanged at +.6 instead of an expected revision higher.  Freddie posted a wider than expected Q4 loss. Sprint lost $29.5 bln in Q4.  Thornburg Mortgage is facing margin calls. Chairman Bernanke sparked selling both in the dollar and in financial stocks when he made some comments regarding bank failures. Bernanke said banks need more capital and that he sees no failures among big banks but felt that there could be some small bank failures.  The Euro is trading at $1.523. Treasuries have been on a tear to the upside all day. The 5 yr note is up the most, shedding 15 bp in yield even in the face of a $16 bln 5 yr auction. There is a huge short in 5's. Asian buyers have been aggressive for the last three sessions in a row. The auction came on the rich side at 2.755, but has continued trading higher. A break through 3.75 on 10's kicked in a forced short covering frenzy, taking the yield down to 3.69. There could be more long end buying tomorrow, the last day for month-end extensions."

From UBS:  "Fed Chairman Bernanke’s prepared testimony on Thursday was the same as Wednesday’s, in which he highlighted downside risks to growth, even as he acknowledged the pickup in commodity prices as well as core inflation over the past month. In Q&A, Senator Dodd (D-CT) asked Chairman Bernanke if the Fed is in as strong a position to respond to the current situation in the economy as in the 2001 downturn. Mr. Bernanke responded: “There are certainly some similarities with the 2001 experience, most obviously the sharp change in asset price. In the previous case it was the stock market—tech stocks. In this case, it’s home prices. But there are some important differences as well, as you point out. The decline in home prices is creating a much broader set of issues, both for borrowers and homeowners, but also for the credit markets. And so we have a sustained disruption in the credit process, which has gone on now since last August and is not yet near completion. And so that is a continuing drag on the economy and a continuing problem for us as we try to restore stronger growth.. The other, I think, problem is that we do have greater inflation pressure at this point than we did in 2001. ” He also was asked about his thoughts on “stagflation”. He responded “I don’t anticipate stagflation. I don’t think we’re anywhere near the situation that prevailed in the 1970s.” ...Equity markets finished lower on Thursday, with both the S&P500 and the Nasdaq each down 0.9%. Homebuilding and financial stocks again fell sharply: the S&P 500 homebuilding index fell 8.1% and the financials index ended down 3.0%. At 4pm Treasury yields were lower, with the 2-year yield down 16bps to 1.84% and 10-yr yields down 18bp to 3.68%. The dollar weakened again versus the euro (-0.6% to another record low) and the yen (-1.1%). Crude oil prices rose 2.6% to $102.21/bbl."

See attached charts of Euro, S&P 500, 10-year Treasury yield, gold, wheat, CRB Index of commodity prices, VIX index of implied stock volatility (prices normally rise when demand for "insurance", or buying puts, in the equity markets increases)

Three month T-Bill yield fell 7 bp to 1.89%.

Two year T-Note yield fell 18 bp to 1.82%

Ten year T-Note yield fell 18 bp to 3.67%

Dow fell 112 to 12,582

S&P 500 fell 12 to 1368

Dollar index fell .49 to 73.73

Yen at 105.3 per dollar 

Euro at 1.52 

Gold rose $13 to $971

Oil rose $2.84 to $102.5

*All prices as of 4:44 PM

4th Quarter GDP Growth Remains Anemic

First revisions to 4th quarter GDP data this morning did not improve as expected.  Real GDP had been anticipated to increase to +.8%, but instead held steady at an anemic +.6% annualized growth rate.  This compares negatively to the 4.9% growth observed in the third quarter. 

 

As anticipated, exports were revised up to +4.8% from 3.9%, and imports were revised down to -1.9% from +.3%. The improvement in trade kept GDP from being negative last quarter, as net exports added +.9% to real GDP in the 4th quarter.  GDP has grown every quarter since 2001.  Government spending was revised lower, though non-defense spending rose.  Inventories saw a larger than expected liquidation of -$10 billion versus the prior -$3.4B.  In addition, gross private investment fell by -12.5% versus the previous -10.2%, and residential construction took off an even larger drop of -25.2% versus the originally reported decline of -23.9%.  The drag from residential construction was the largest since 1981.

 

Personal consumption/consumer spending eased back to 1.9%, versus +2% originally reported, and has likely eased further in the first quarter as consumer sentiment has slumped.  To add to the consumption problems, personal income growth was revised down to +4.1% from +4.5%, and is unlikely to recover rapidly as unemployment rises.

 

Though core PCE held steady at 2.7%, the headline index rose to 2.7% from the original estimate of +2.6%. 

 

The final 4th quarter GDP figures will be released in March.

Jobless Claims Trend Higher

Initial jobless claims unexpectedly rose +19k last week to 373k.  This is the highest level since 2005!  Consensus had looked for an unchanged level of 350k.  The number of continuing claims also rose to almost 2.81M suggesting that labor demand is weakening.

OFHEO to Remove Portfolio Growth Caps

Contact Corinne Russell (202) 414-6921   Stefanie Mullin (202) 414-6376
For Immediate Release February 27, 2008
	STATEMENT OF OFHEO DIRECTOR JAMES B. LOCKHART
Fannie Mae published its timely, audited financial statement for 2007 today and Freddie Mac anticipates publishing its statement tomorrow. These steps constitute an important milestone in remediation of their respective operational and control weaknesses that led to multi-year periods when neither company released timely, audited financial statements. Both companies have been operating under regulatory restrictions stemming from these past problems. These restrictions include growth limits on their retained mortgage portfolios, Consent Orders prescribing necessary remediation actions, and required 30 percent capital cushions above the statutory minimum capital requirements. Mortgage Portfolio Growth Caps In recognition of the progress being made by both companies, as indicated by the timely release of their 2007 audited financial statements, and consistent with the terms of the relevant agreements, OFHEO will remove the portfolio growth caps for both companies on March 1, 2008. Consent Orders Both companies have also made substantial progress with respect to completing the requirements of their respective Consent Orders. As each Enterprise nears completion, OFHEO is working with them to undertake a thorough review and validation of the completed work and will test the new systems and controls, as needed. To the extent that OFHEO finds the Enterprise has fulfilled the requirements of its Consent Order and the Enterprise has continued to file timely, audited financial statements, OFHEO will lift the Consent Order. Fannie Mae has reported to us that its remediation activities under the Consent Order are nearing completion. Freddie Mac has completed most of the requirements under its Consent Order, but still faces the requirement of separating the CEO and Chairman position. Although not in the Consent Order, completion of the SEC registration process is a critical step. OFHEO-Directed Capital Requirements Since agreements reached in early 2004, OFHEO has had an ongoing requirement on each Enterprise to maintain a capital level at least 30 percent above the statutory minimum capital requirement because of the financial and operational uncertainties associated with their past problems. In retrospect, this OFHEO-directed capital requirement, coupled with their large preferred stock offerings means that they are in a much better capital position to deal with today’s difficult and volatile market conditions and their significant losses. As each Enterprise nears the lifting of its Consent Order, OFHEO will discuss with its management the gradual decreasing of the current 30 percent OFHEO-directed capital requirement. The approach and timing of this decrease will also include consideration of the financial condition of the company, its overall risk profile, and current market conditions. It will also include consideration of the importance of the Enterprises remaining soundly capitalized to fulfill their important public purpose and the recent temporary expansion of their mission.  ###
OFHEO's mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae and Freddie Mac.

New Home Sales Continue Decline - Set New Records in Annual House Price Declines- Inventory Highest Since 1981!

New home sales continued plummeting in January, falling an additional -2.8% MoM to a new cycle low of 588k. This is the lowest new home sales pace since 1995.  In addition, this figure doesn't include cancellations.  Toll Brothers this morning announced that their cancellation rate is slowing, it fell to 28% in the most recent quarter from 39% in the prior quarter.  So, most likely real new home sales are even weaker than reported.  Over the past year, new home sales have fallen -34% YoY.

 

Inventories rose again to a new high of 9.9 months, based on the current sales pace, the highest since 1981!  Actual number of homes for sale fell -2.2% MoM.  Clearly there is still way too much excess inventory.

 

Median prices tumbled further down the cliff in January, falling almost $10k MoM to $216K.  This level is down -15% YoY, a new record for this series which looks back over 40 years.  The mean price is down -12.1% YoY to $276.6K.  But, this figure needs to be consumed with caution.  The credit crunch in jumbo loans has practically shut-down activity at the upper end of the market, which naturally will bias down the median.  There are also regional variations in pricing costs that will impact the national average as different regions activity changes.

 

Regionally, purchases fell everywhere but the West, where they rose +2.2% MoM.  The Northeast saw the largest decline at -10% MoM.

 

New home sales account for less than 15% of home purchases each year, and they are considered a more timely indicator of demand than existing home sales.  Fixed-rate interest rates rose last week to the highest level since last October, at 6.27% for a 30 year.

 

Durable Goods Orders Reverse December Strength in January

Durable goods orders fell more than expected in January, declining -5.3% MoM (consensus -4%).  In addition, December's gain was revised down to +4.4% MoM from the originally reported increase of +5.2% MoM.  A large swing in aircraft orders(-31% MoM) is responsible for the majority of the change, though decreased demand for computers and communication equipment (-12% MoM) were also significant contributors.  Excluding transportation orders (-13% MoM), which are known to be very volatile from month to month, durable goods orders fell -1.6% MoM (consensus -1.4%), and December's ex-transportation figure was also revised lower to +2% from +2.6%.

 

Business investment is being watched closely as a good indicator of rising recession risks as companies cut back in the face of weakening business and consumer demand.  The best proxy for business investment is orders for non-defense capital goods excluding aircraft.  This category fell -1.4% MoM, the largest decline since October, and shipments rose +.1% MoM, a definite slowdown from the +1.7% pace of the prior month.

 

Capital goods orders declined by -9.6% MoM.  A 20% decline in military orders caused ex-defense equipment orders to fall -4.7% MoM, though defense shipments rose +11% MoM.  Non-defense capital goods orders fell -8.1% MoM.  Not all is bleak, as export orders remain strong on higher demand related to the cheapening dollar.

 

Overall, durable goods shipments rose +1.8% MoM, inventories rose +.6% MoM, and unfilled orders rose +.6% MoM.  The inventory to shipment ratio eased slightly to 1.5 from 1.51.

 

Over the past year, new durable goods orders rose +3% YoY, with ex-transportation and ex-defense both growing by 2.8% YoY.  Capital goods orders are up +13.3% YoY, with defense up only +3.9% YoY and non-defense capital goods orders rising +15% YoY.  Transportation orders are up +3.6% YoY.  All of the transportation gains are attributable to non-defense aircraft orders rising +84% YoY while auto and truck orders have fallen -7.6% YoY.  Machinery orders have grown an impressive +17% YoY.  Inventory growth continues, rising +3.9% YoY.

 

The January reversal basically offset the gains of December. Since this series is volatile, it is probably best to assume that demand has stagnated, rather than declined as we enter 2008.  But, weakness in business investment is an important indicator of an economy falling into recession.

Fannie Has $3.55 Billion Fourth-Quarter Loss Amid Housing Slump

Fannie Has $3.55 Billion Fourth-Quarter Loss Amid Housing Slump

2008-02-27 08:14 (New York)

 

By James Tyson
     Feb. 27 (Bloomberg) -- Fannie Mae, the largest source of
money for U.S. home loans, posted a $3.55 billion loss in the
fourth quarter as the failure of homeowners to keep up with their
mortgage payments dragged down the value of the company's assets.
     The net loss was $3.80 share, compared with profit of $604
million, or 49 cents, a year earlier, Washington-based Fannie Mae
said in a statement today. Excluding some items, the per-share
loss was $3.79, compared with the $1.20 average estimate of 12
analysts in a Bloomberg survey.
     An almost doubling in home foreclosures and an economy
teetering near recession are reducing the value of the
$2.3 trillion of mortgages the government-chartered company owns
or guarantees. Chief Executive Officer Daniel Mudd said last
month that Fannie Mae faces a ``tough year.'' The slump may force
the company, which sold $7 billion in preferred stock in
December, to raise more money, said Paul Miller, an analyst at
Friedman Billings Ramsey & Co. in Arlington, Virginia.
     Fannie Mae ``will continue to have trouble with both credit
losses and capital levels,'' said Miller, who on Feb. 25
downgraded the stock to ``underperform.'' Credit impairments will
exceed company estimates and ``the Street's expectations.''
     The company, which accounts for at least one in five home
loans, has lost more than half its market value in the past year
as the housing slump deepened. Analysts at Goldman Sachs Group
Inc. and Merrill Lynch & Co. cut their recommendations to
``sell'' in the past week on concern that falling home prices
will restrict earnings.

 

                            Loan Losses

 

     Fannie Mae fell $1.30, or 4.6 percent, to $26.97 yesterday
in New York Stock Exchange composite trading. Freddie Mac, which
ranks second to Fannie Mae, dropped 97 cents to $25.21 yesterday
and is down more than 61 percent in the past year.
     Fannie Mae's loan loss ratio was 4 basis points during the
nine months ended Sept. 30. Fannie Mae in November estimated
credit losses this year would double to 8 basis points to
10 basis points.
     Miller says Fannie Mae's credit losses will rise to a range
of 15 basis points to 25 basis points this year and in 2009.
Howard Shapiro, an analyst at Fox-Pitt Kelton Cochran Caronia
Waller in New York, forecasts a range of 11 basis points to
14 basis points. A basis point is 0.01 percentage point.
     Freddie Mac is scheduled to report tomorrow. The McLean,
Virginia-based company had losses of $2.02 billion in the third-
quarter and $480 million in the year-earlier fourth quarter.

 

                          Timely Earnings

 

     Fannie Mae, by reporting timely audited financial results
for the first time since 2004, met conditions for the removal of
a federal limit on its $724 billion in mortgage investments
imposed after a $6.3 billion overstatement of earnings. Its
portfolio of home loans and mortgage-backed securities is one of
its two main sources of profit.
     Still, the need to bolster capital against the worsening
housing market will inhibit growth this year, Miller said. Fannie
Mae sold its preferred shares in December after its third-quarter
loss of $1.4 billion.
     ``For me to get very comfortable in recommending this stock,
I'd like to see something above $15 billion in capital raising,''
Miller said.
     Fannie Mae needs to complete the final items on a list of
81 changes in accounting, internal controls and governance in
order to shed a requirement that it set aside 30 percent more
reserve capital than normal, the company's regulator told a
Senate committee on Feb. 8.

 

                    Credit-Default Swaps

 

     The cost of protecting Fannie Mae bonds from default have
doubled this year. Credit-default swaps tied to the bonds rose
6 basis points to 85 basis points today, according to broker
Phoenix Partners Group in New York.
     A basis point on a credit-default swap contract protecting
$10 million of debt for five years is equivalent to $1,000 a
year. Credit-default swaps are financial instruments based on
bonds and loans that are used to speculate on a company's ability
to repay debt. They pay the buyer face value in exchange for the
underlying securities or the cash equivalent should a borrower
fail to adhere to its debt agreements.
     Congress created Fannie Mae and Freddie Mac to increase
mortgage financing by buying loans from lenders. The publicly
traded companies profit by holding mortgages and mortgage bonds
as investments and by charging a fee to guarantee and package
loans as securities. They record losses when defaults rise.

 

                        Foreclosures Rise

 

     Bank seizures of U.S. homes almost rose 90 percent to
45,327 last month from the same period a year ago, according to
RealtyTrac Inc., a seller of foreclosure statistics that has a
database of more than 1 million properties. Total foreclosure
filings, which include default and auction notices as well as
bank seizures, increased 57 percent. More than 233,000 properties
were in some stage of default last month, RealtyTrac said in a
statement.
     The foreclosures are plunging the housing industry deeper
into recession by pushing more houses onto a market where
existing home sales are now at the lowest level since records
began nine years ago and prices are dropping. There's a 10-month
supply of unsold homes, the highest in at least eight years.
     Senate Banking Committee Chairman Christopher Dodd and other
lawmakers have urged the Bush administration for more than seven
months to ease constraints on Fannie Mae and Freddie Mac to help
revive the housing market.
     ``The restrictions imposed on Freddie and Fannie have a
direct impact on their flexibility to assist the struggling
housing markets,'' Senator Charles Schumer, a Democrat from New
York, said in a Feb. 25 letter to James Lockhart, the director of
the Office of Federal Housing Enterprise Oversight.

 

--With reporting by Shannon D. Harrington in New York. Editors:
Romaine Bostick, Emma Moody

First Annual Decline in OFHEO Home Prices Reported for 2007 - Peak to trough down -2.4%

The OFHEO index of "purchase only" home prices fell -1.3% in the fourth quarter of 2007 versus the third quarter, a substantial acceleration in decline from the -.3% quarterly decline between the 2nd and 3rd quarters of 2007.  For the year as a whole, purchase only prices fell -.3% YoY.  This represents the first national OFHEO home price decline since its inception in 1991.

 

Home price weakness was broadbased, every state but Maine saw purchase prices drop in the fourth quarter.  For all of 2007, 16 states plus DC showed annual declines in purchase transactions, with the most weakness occurring in regions that saw the largest run-ups earlier this decade.  99 of 291 MSA's experienced annual home price declines in 2007, with cities in California and Florida representing the largest drops.  The Pacific region saw a -4.5% quarterly house price decline.

 

Beginning this month, OFHEO is going to begin reporting monthly price changes.  Purchase prices fell -.2% nationally in December, according to OFHEO.  Their data shows home prices as having declined steadily for the past six months, and shows a cumulative decline from their April 2007 peak in home prices of -2.4%.

 

If refinancing data is included, which depends more on home appraisal data, the all-transactions index showed a modest +.1% quarterly price gain in the 4th qtr of 2007, and an annual increase of +.8% YoY for all of 2007. 

 

If the nominal price changes are adjusted for inflation, OFHEO data indicates real home prices fell -4.6% YoY from the 4th qtr of 2006 through the 4th qtr of 2007.

 

OFHEO data only represents prime, conforming mortgage loans, so it misses data from sub-prime and jumbo loans, and is not considered the best measure for the entire housing market.  The data comes from Fannie and Freddie and represents 34 million repeat transactions.

Consumer Confidence Dropped Sharply in February

U.S. Consumer Confidence plunged in February, dropping to 75 from a revised lower 87.3 in January.  The market had been looking for a drop to 82.  The index hasn't been this low since early 2003, when the US began the Iraq conflict.  If the early 2003 data is ignored, the index is at a 15 year low.  Both the current and future expectations indexes weakened materially.  The present situation index fell from 114.3 to 100.6 in February versus January.  Future expectations eased to 57.9 vs 69.3 the prior month, and are now at a 17 year low set in January 1991, during the last major housing downturn. 

 

The difference between jobs plentiful vs easy to get fell into negative territory for the first time in over six months.  The number seeing jobs as not plentiful rose to 55.6, while those seeing jobs plentiful fell to 20.6.  As recently as last July the jobs plentiful figure was 50% higher at 30.  Views of business conditions also worsened.

 

Looking at expectations for conditions in six months, there were large increases for worse business conditions (21.4 vs 16.3) and fewer jobs (27.9 vs 21.9) versus January.  The percentage of respondents expecting income to decline rose a more modest +.3 MoM.

 

Buying intentions over the next six months surprisingly showed upticks in home purchases and major appliances, though they were slight.  Those expecting to take a vacation fell.

 

Inflation expectations over the next year held steady at 5.3% YoY.

 

The survey is based on 5,000 households, and all calls were completed by February 19th.

 

This data indicates that growth probably continued to slow in early 2008 and recession risks are rising.

S&P Case Shiller Home Price Index Shows Record Home Price Declines

The December 20-city index fell -2.15% MoM, and -9.1% YoY.  This was a slower pace of annual decline than consensus had expected of -9.7%, but still notably higher than the -7.7% annual drop reported in November.  The trend over the past three months shows acceleration with monthly declines of -1.4% in October and -2.1% in November, and -2.15% in December.  All 20 cities saw declines in December.  The smaller 10-city index, which is focused on cities that had larger price gains, saw a -2.3% MoM decline, and a -9.8% YoY drop. 

 

The largest monthly decline was Phoenix at -3.5% MoM, followed by San Diego, San Francisco and Los Angeles, which all had monthly declines of over 3%.  On an annual basis, Miami leads the decline with a fall of -17.5% YoY, followed by Phoenix at -15.25% YoY.  Other cities seeing double digit annual declines include San Diego, Tampa, Detroit, Los Angeles and San Francisco.

 

The national 4th quarter Case-Shiller data shows a -5.36% quarterly drop, and a much larger than expected decline of -8.9% YoY (consensus -6.5-7%).  The quarterly drop, when annualized, equates to almost a 20% annual price decline.

 

The Case-Shiller index includes homes from all price ranges and is based on actual selling prices for individual properties.  The national figure is based on a composite index of major markets weighted by their capitalization. 

January Producer Price Inflation Rises to 25+ Year High

Inflation continues to accelerate, and at a much faster pace than anticipated.  Headline inflation rose a much stronger than expected +1% MoM (consensus +.4%), and to a 25+ year high (1981) of 7.4% YoY (consensus +7.3%, prior +6.3%).  Food and energy price gains were much stronger than expected.  Food prices rose +1.7% MoM (+8.3% YoY) and energy rose +1.5% MoM (+22.6% YoY).  Gasoline rose an even stronger +2.9% MoM and 48.1% YoY.  Core PPI, which excludes food and energy, rose +.4% MoM (consensus +.2%) and +2.3% YoY (consensus +2.2%, prior +2%).  The monthly increase in core inflation was the largest in almost a year.

 

There was a broad-based rise in core consumer goods (+1.1% MoM) and capital equipment (+.4% MoM) in January.  Drug costs rose +1.5% MoM, the largest monthly gain in a year and a half.  Computers, cars, and women's apparel are the only major categories showing annual price declines.

 

Crude food prices, which covers grains such as corn and wheat, that have been hitting new record highs this year, rose +2.7% MoM in January.  Producer prices for all crude goods, the earliest level in the chain of production, rose +2.5% MoM (+31.3% YoY), while intermediate goods prices rose +1.4% MoM (+8.8% YoY).  Excluding food and energy, crude goods have risen +4% MoM and +21% YoY, while intermediate core PPI prices have risen +.8% MoM and +4.1% YoY.  It is clear that pipeline pressures are re-emerging.

 

This was the last of the major inflation indicators for January.  CPI and import prices also showed strong gains, with the annual increase in import prices hitting an all-time record high of 13.78% YoY. Higher commodity prices are clearly feeding into final prices, as are rising labor wages in Asia.

Existing Home Sales

Existing home sales showed signs of slowing decline in January.  December's figure was revised slightly higher to 4.91 million, and January's level came in at December's originally reported level of 4.89 million annualized pace of homes sold.  This was considerably better than the 1.8% decline forecast by the market to a 4.8 million annual sales pace.  Net, sales fell -.4% MoM, but were unchanged from December's originally reported decline.

The strength emerged in single family sales, which rose +.5% MoM (-22.4% YoY) to an annualized pace of 4.34 million homes, while condos fell -6.5% MoM (-30.2% YoY). 

Inventory rose in single-family homes to 10.3 months from 9.7 months in January, and fell to 11.8 months in condos from 11.9 months the prior month.  Both inventory levels are down from the highs of last October when single-family supply was 10.2 months and condos ran at 12.5 months.  It is fairly normal for inventory levels to rise in January.

Median home prices continue to slide.  Single-family median home prices are down -5.1% YoY to $198,700, and condos are down -1% YoY to $220,400.  In aggregate, existing home prices fell -2.9% MoM and -4.6% YoY.  From the peak, existing home prices are down -11.8%.

Correction-

 

Inventory rose in single-family homes to 10.1 months from 9.4 months in January, and fell to 11.8 months in condos from 11.9 months the prior month.  Both inventory levels are down from the highs of last October when single-family supply was 10.2 months and condos ran at 12.5 months.  The combined inventory for the two categories was 10.3 months in January versus at peak of 10.5 months in October.  It is fairly normal for inventory levels to rise in January.