Home sales below expectations

Existing Home Sales in Jan totaled 4.57mm annualized, below expectations of 4.66mm and Dec was revised lower by 230k to 4.38mm. Taking the two months together and sales were 320k less than initially expected. However, because the number of homes for sale continues to shrink, to the lowest since May ’05, months supply fell to 6.1 from 6.4 to the smallest since April ’06. The median home price fell 2% y/o/y to $154,700, the cheapest since Nov ’01. Distressed sales totaled 35% of the total (22% foreclosures, 13% short sales) vs 32% in Dec and 37% in Jan ’11. Contract cancellations totaled a large 33%, unchanged from Dec but up from 9% in Jan ’11 as mortgage apps get denied and appraisals come in below the agreed upon price. A key for sales and pricing looking out over the next few months will be whether we’ll see a flood of foreclosures now that banks have settled with all the state AG’s, possibly clearing out the backlogs that have been built up when the aftermath of robosigning froze the process in many states.

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