Housing market refuses to stabilize

No springtime bounce for the real estate industry -- in March, the median sales price of an existing home dropped 7.7 percent compared to year ago

By Andrew Leonard

Published April 22, 2008 2:29PM (EDT)

So much for February's "surprising" 2.9 percent month-on-month rise in existing home sales. The numbers for March, reported by the National Association of Realtors, are not good -- a 2 percent drop in sales compared to February, and 7.7 percent drop in median sales-price compared to March 2007. The numbers are even worse when you consider that the normal seasonal trend at this point in the year, as explained by Barry Ritholtz in The Big Picture this morning, is for sales to increase -- which led him to make a "bold" prediction that the March existing home sales number would rise slightly.

He was wrong, and, amazingly, the consensus pessimism of economists surveyed by the Wall Street Journal turned out to be exactly on the money. (See UPDATE below).

One anomaly in the report jumped out at How the World Works. Compared to a year ago, the median sales price of an existing home dropped sharply, but month-on-month, prices actually rose, from $195,600 in February to $200,700 in March. A possible explanation? Condominium sales bumped up in March, and the median sales price of a condo was significantly higher than of a single-family home.

Why should we care about such parsing? The National Association of Realtors was quick to claim that February's 2.9 percent month-on-month rise in existing home sales was a sign that the housing market was "stabilizing." If so, one could start to make all kinds of optimistic predictions regarding how much further the current economic downturn has to go. But March's news suggests spring has not yet arrived for the real estate industry.

UPDATE: Whoops, I misinterpreted Ritholtz's analysis. He was confining himself to predicting that the raw, non-seasonally adjusted numbers of existing home sales would rise, which they did, marginally.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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