| Home Sales and Prices Decline in May |
| Written by Jonathan Smoke | |
| 06.26.2007 | |
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Discuss this article on the forums. (0 posts) Yesterday the National Association of Realtor’s reported that existing home sales declined in May to a four-year low. With a corresponding slight increase in inventory, the month’s supply of homes rose to a 15 year high at 8.9 months.  Today, the Commerce Department reported that new home sales also declined 1.6% in May to an annual rate of 915,000. They also revised down their April figure. Instead of the previously reported increase in sales of 16%, they now stand at an increase of 13% in April, so this revision lessened the May decline figure.Additionally, NAR reported that the median home price declined 2.4% from a year ago to $223,000. This median price gives us a closer read on recent market activity, but because it represents the median of all home sales without any adjustments for changes in types or locations of homes being sold, this measure can lead to incorrect conclusions about the direction of home prices. Many economists consider the S&P/Case-Shiller Indexes to represent more accurately what is going on with home prices as the index utilizes a repeat sales methodology and other qualitative adjustments to ensure better control of what is being measured. And the latest release reveals that prices are falling. According to a report from Tradition Financial Services, Inc., the April release looks like this: )) The composite for 10 markets declined in April compared to March and also declined in April over the prior year index. Only three of the ten markets covered are bucking the price decline trend—Boston, Denver, and San Francisco, but all of those markets are down compared to home prices in April last year. Only Chicago looks fractionally better year over year. Now, do consider that these are ten markets that are the basis for housing futures so they are big and important markets, but they were chosen in part because they experienced some of the most significant price increases in the housing boom. I personally find some comfort that the composite in these markets was only down a fraction of a percent in April over March. But if the NAR Median Sales price index is a leading indicator, the May S&P/Case-Shiller report may be worse. 
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