Bankruptcy & Foreclosures

Here in New York we have an expression: “Don’t like the weather? Give it five minutes.” Perhaps that’s a bit of a stretch but lately news of the economy isn’t all that far off. Since today’s Monday (yes the beginning of the work week again so soon), we have a mixed bag of news to report on the state of current affairs to get things started.

After six straight months of tumbling, sales of existing homes somhow posted an unexpected increase in February. There is a good possibility this is a result of more aggressive price cutting by sellers in some parts of the nation.

According to the National Association of Realtors sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It was the biggest increase in a solid year and since economists were actually expecting a decline, this news came as a surprise.

Don’t pop the cork off the champain just yet. Analysts are cautioning against reading too much into this single month sales increase. Popular economists theory states that the steep slump in housing will not bottom-out until later this year after prices fall even further which will cause large levels of unsold inventories to be reduced.

The inventory of unsold homes dipped to 4.03 million units in February. This means if house sales continued on the same pace that they did in February, it would take 9 and a half months to get all of the unsold houses on the market to sell.

Here’s the kicker: Sales may have been up but prices are on the slide. The median sales price for a single-family home (and condomiums) dropped to $195,900, a fall of 8.2 percent from last year at this time (sadly the biggest slide in the current housing slump). That’s down 8.7 percent from a year ago which represents the biggest decline in four decades.

I suppose news of these opposing curves does make sense. The most logical explanation for the increase in sales is directly related to a decrease in pricing. It’s true that individuals today are facing difficulties securing loans, these are times where good deals on property purchases can be had. We’ll be keeping close watch on March’s figures as more longterm patterns will be easier forcasted should a multi-month pattern appear.