At least this time, the media didn’t use its favorite adverb to describe bad economic news. The sales of existing homes fell yet again in February, continuing a months-long decline in bad news from the real-estate markets. Inventory expanded at the same time, hinting of an increase in foreclosures:
Sales of existing U.S. homes fell in February for a third month, indicating a lack of jobs is hindering government efforts to revive demand.
Purchases dropped 0.6 percent to a 5.02 million annual rate, the lowest level in eight months and in line with the median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price decreased 1.8 percent from February 2009.
The extension and expansion of a federal tax credit that helped stabilize housing in 2009 has yet to spark sales this year as hiring hasn’t materialized. Home Depot Inc. is among companies cutting prices to stimulate demand as the world’s largest economy recovers from the worst recession since the 1930s.
“It’s a fragile recovery, we are bouncing along the bottom,” said Scott Brown, chief economist at Raymond James & Associates, in St. Petersburg, Florida, who forecast a 5 million sales pace. “We ultimately need to see job growth to get a sustainable rebound.”
It’s not a recovery at all, if this data is correct. If we’re bouncing along the bottom, we’re bouncing in one direction — down. The Obama administration rolled out an extension for its homebuyer credit last year, and it has done nothing to correct the slide in the housing market.
Job growth will be key to rescuing real estate. Unfortunately, even the White House doesn’t see any possibility of that in 2010. They estimate the jobless rate to be largely unchanged this year, with it dropping only to 8.9% at the end of 2011 and 7.8% in 2012. If so, then home values will continue to erode, putting more people underwater on their mortgages despite the interventionist policies of the Obama administration.
And guess what that means?
The number of previously-owned homes on the market jumped 9.5 percent to 3.59 million. At the current sales pace, it would take 8.6 months to sell those houses compared with 7.8 months at the end of the prior month.
The increase in supply last month was “unusual,” Lawrence Yun, the Realtors’ chief economist, said in a news conference today. The jump may be caused by more distressed properties coming on the market and by trade-up buyers who are now putting their houses up for sale in advance of other purchases, he said.
“Distressed” means foreclosures. Get ready for more of them in 2010, especially after imposing massive new costs on businesses through ObamaCare.