And March national existing-home sales actually rose 2.2 percent in the Northeast and West, says the NAR. Its chief economist, Lawrence Yun, reports that sales have stabilized between 4.9 million and 5.1 million in the last 7 months since the credit crunch began.
Still, a 9.9-month inventory of existing-homes for sale will continue to depress prices in the coastal states that had the greatest price increases over the past year. In fact, economist Yun says that 18 percent of all Multiple Listing Service offerings had negative equity at the asking price, indicating either a short-sale or foreclosure. The overall median-home price is down 7.7 percent over last year to $207,000.
Lower prices are bringing buyers back into the market, however. The NAR’s February Housing Affordability Index is at 135 percent, up from 114 percent last February. It means that a family with a median annual income of $60,000 can now afford a house that is 135 percent of the median income, or $279,450. Affordability has improved because the median price has declined 9 percent in a year and fixed interest rates have fallen 0.5 percent.
EXISTING-HOME SALES—Overall sales fell 2 percent in March, and are down 19 percent in a year. Condo and coop sales actually rose 3.6 percent.
HOUSING PRICES—The Office of Housing Enterprise Oversight reported that same-home prices with conforming loan amounts rose 0.6 percent in February. Prices were down 9 percent in the Pacific Region in a year.
INFLATION—Both the wholesale (PPI) and retail (CPI) price indexes continued higher in March. The PPI soared 1.l percent, but its core rate without food and energy increased just 0.2 percent. The CPI rose just 0.3 percent. This shows that higher food and gas prices are depressing consumer spending. The reduced spending has taken more than 1 percent from economic growth.
Inflation is eating away at the U.S. consumer, in other words. The higher energy and food prices are the main obstacles to a recovery. Inflation normally subsides during a slowdown, but that hasn’t happened yet.
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