A spirited housing debate on CNBC
Some of the main points I tried to make:
* Existing home sales for February did rise 3.9% on the month. But they also dropped about 3.6% from a year earlier.
* The real problem? For sale inventory climbed even faster than sales – by 5.9% to 3.748 million units. That’s up 25.6% from the same month in 2006. We have more than 1 million more existing homes on the market now than was customary throughout the 1990s.
* That excess inventory is helping drive prices lower. Median home prices dropped 1.3% year-over-year to $212,800, the seventh straight month in a row that prices fell (that, in turn, is a record negative streak).
* Lastly, January's pending home sales index dropped 4.1%. That means we'll probably see existing home sales slip again.
* New home sales are in much worse shape. They dropped 3.9% between January and February, and 18.3% year-over-year. Measured from the July 2005 market peak, new home sales are down a whopping 38%. Moreover, February's Seasonally Adjusted Annual Rate of sales -- 848,000 -- was the slowest since June 2000.
* There are inventory problems in the new home market as well. In fact, the supply of homes for sale remains very high from a historical standpoint – about 175,000 more units than we had at any time during the 1990s. Cancellations aren’t captured in the orders or inventory data. That means demand could be overstated, and supply could be understated.
* Median new home prices are down 0.3% year-over-year and about $7,000 off their April 2006 high ($257,000).