Existing home sales decline slightly

May’s existing home sales declined by 2.2% vs. April’s number.

Analysis: The primary reason for the decline is that a Federal Government tax credit for first time home buyers expired on April 30th.  While some pundits may be worried about the health of the housing market, a 2.2% decline is really not much of a decline given that the first time home buyer credit was so large and beneficial.  To me it’s a sign of increasing robustness in the housing market that even without the tax credit sales are basically even.

Additionally, the median price of a home in the U.S. was up year over year and to the tune of 2.7%.  That makes the median home price $179,600.  Clearly the real estate market is improving for prices to be up.  Folks could only be upset by this number if they still had home price increase expectations circa that of 2004-2007.

I have said since the beginning of the blog that slow, steady and real economic growth out of the recession was needed.  For far too long what counted as economic growth was really expansion driven by super easy money.  In other words, the economic equivalent of increased consumer spending due to increasing balances on credit cards.  Not sustainable in the long-term and also not real.

Importance grade: 4/8; the 4 is for the decline in the number of existing home sales, whereas the 8 is for the increase in the median home price.

Jason