Existing U.S. home sales declined in February by 0.6%, according to the National Association of Realtors. While the decrease is small, it fits in with a broader trend: for three months now we've seen existing home sales decline. As with all February data, snow was partially to blame. But it also appears to indicate that the home buyer credit is not conjuring up as much demand as hoped.
Here's a chart that shows how this statistic has changed over the past 18-months.
As stated, those numbers are seasonally adjusted. So the decline of home sales in winter is already taken into consideration. In November, we saw a huge peak. That was the month when the first time home buyers' credit was set to expire. After it was extended, presumably Americans' sense of urgency to buy a home declined. So have sales, dramatically.
That extension is set to last until April. If you do a month-by-month timing comparison, you can see that in January 2010 and August 2009, three months prior to the program's set expiration at the time, the levels were about equal. But February 2010 is quite a bit lower than September 2009, two months prior to the buyer credit's scheduled expiration. To me, that continues to indicate that the demand for buying homes has weakened considerably and the home buyers credit might not be doing much to enhance sales.
Unfortunately, again, we're faced with a month where the weather may have had some effect. I find it a little hard to believe that the snow could have been hugely significant, but it probably lowered sales a little. So we'll have to wait until March data is available to see if there's a spike similar to the level we saw in October 2009. If not, then a new normal in existing home sales may be stabilizing around the 5 million annualized rate. Worse news would be that the credit actually has been having a major effect, and existing home sales will decline still further after April, to a level somewhere below the 5 million mark.