No, The Housing Comeback Is Not Taking A Pause

Just in case you were wondering...good news all around!
 
 

Here are a few excerpts from a Reuters article: Existing Home Sales Fall as Prices Rise  Most Since 2005

U.S. home resales edged downward in March, a  pause in the housing market recovery that has helped boost the economy

Nationwide, the median price for a home resale  rose to $184,300 in March, up 11.8 percent from a year earlier, the biggest  increase since November 2005. The limited supply of available properties is  pushing up home values.

First, this isn't a "pause in the housing market recovery". The housing  recovery is based on residential investment, and only the commission on existing  home sales is included in residential investment (the main contributors are new  home sales and home improvement).   A decline in the headline number  for existing home sales due to fewer distressed sales, is a positive, not a  negative!

Second, the median price is a poor measure of overall  market prices since this reflects changes in the mix in addition to changes in  prices (the repeat sales indexes are a better measure of price changes).   Note: Lawler  used the median over the weekend to show that investors are buying at a  higher price point - an appropriate use of the median price.
The NAR  reported total sales were up 10.3% from March 2012, but conventional sales are  probably up over 20% from March 2012, and distressed sales  down.  The NAR reported (from a survey):

Distressed homes - foreclosures and short sales -  accounted for 21 percent of March sales, down from 25 percent in February and 29  percent in March 2012.

Although this survey isn't perfect, if total sales were up 10.3%  from March 2012, and distressed sales declined from 29% of total sales to  21%, this suggests conventional sales were up sharply year-over-year - a good  sign. However some of this increase is investor buying, although the NAR is  reporting investors are buying about the same percentage as a year ago:

Individual investors, who account for most cash  sales, purchased 19 percent of homes in March, down from 22 percent in February;  they were 21 percent in March 2012.

Other data suggests investor buying has increased, see Housing:  Some thoughts on Investor Buying, Inventory and recent Price Increases and  from the WaPo: Wall  Street betting billions on single-family homes in distressed markets

Of course inventory is the key number in the NAR report.  The NAR  reported inventory increased to 1.93 million units in March, up from 1.90  million in February.  Some of this increase was seasonal, and  this is still a very low level of inventory.  And inventory is still  down sharply year-over-year; down 16.8% from March 2012.  But this  is the smallest year-over-year decline since 2011.     
Important: The NAR reports active listings, and although there is some  variability across the country in what is considered active, most "contingent  short sales" are not included. "Contingent short sales" are strange listings  since the listings were frequently NEVER on the market (they were listed as  contingent), and they hang around for a long time - they are probably more  closely related to shadow inventory than active inventory. However when we  compare inventory to 2005, we need to remember there were no "short sale  contingent" listings in 2005. In the areas I track, the number of "short sale  contingent" listings is also down sharply year-over-year.
 

The following  graph shows existing home sales Not Seasonally Adjusted (NSA).

EHSNSAMar2013

Calculated  Risk

Click on graph for larger  image.

Sales NSA in March (red column) are   above the sales for for 2008 through 2012, but below the bubble years of  2005 and 2006. 
The bottom line is this was a solid report.  Conventional sales have increased sharply, although some of this is investor  buying. And inventory is low, but the year-over-year decline in inventory is  decreasing.

Read more:  http://www.calculatedriskblog.com/2013/04/existing-home-sales-conventional-sales.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29#ixzz2RKm1iP7M