Existing Home Sales fall but prices rise

The National Association of Realtors released the statistics on Existing-Home Sales for March 2008 today.



Seasonally adjusted, Sales were down from February 2008 by 2.0% to an annual rate of 4.93 million and were down 19.3% from a year ago. On the positive side, the median price rose to $200,700 from $195,600 in February but was down 7.7% from the median of $217,400 reached in March of 2007.



Total housing inventory rose 1% to 4.06 million which is a 9.9 month supply (February 2008 was at 9.6 month supply). 6 month supply is where supply and demand are balanced. Inventory started rising rapidly in 2006. At that time supply went over 6 month’s supply and prices started to drop at the same time.



Lawrence Yun, NAR chief economist, is now calling for caution in further rate reductions: “With elevated inflation, the Federal Reserve should be extra careful about further rate cuts. Mortgage interest rates, which do not move directly with Fed funds rates, may rise measurably and hurt the housing recovery if inflation gets out of hand. Monetary stimulus is plentiful – what is needed more at this point is a home buyer tax credit to get buyers off the sidelines and prevent the market from overshooting on the downside.”

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