As economists accurately predicted, existing home sales in April slipped to a 6.76 million unit pace. Although this is approximately off 5% from the 2005 pace, it is near the 6.72 million unit pace for all of 2004, making the current reading stronger than it initially appears.
Perhaps more significantly, however, is that both existing and new home sales last month were similar to the turn of the year levels - close to existing home sales in December, and new homes sales in January. This indicates that the downward momentum in home sales that occurred at the end of last year has been limited so far in 2006, challenging the popular prediction that the demand for homes will continue to slow down.
Meanwhile, April's supply of homes rose to almost six months for the first time in over eight years, illustrating that inventories of homes on the market continue to grow. However, realtors do not necessarily see this as a problem as they believe it points to a market that is roughly balanced between buyers and sellers.
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