The big story for March 2012 existing homes sales was the significant decline in the inventory of homes available for sale (where the months inventory contrasts the current supply, on a seasonally-adjusted basis, to the sales rate). Months inventory in March 2012 was 6.7 months and was down a substantial 24.7 percent from the same month in 2011 (8.9 months).
Sales in March 2012 (on a seasonally-adjusted annualized rate), while down 2.6 percent sequentially from February 2012, were up 5.2 percent from March 2011. As shown in the graph below, housing sales (and this is a 12-month moving average of the seasonally-adjusted, annualized rate) continue to rise. The housing market is finally in a recovery mode, but with annualized sales in March of 4.48 million homes, the current pace is 18.9 percent less than the average in 2002 (which I consider normal given that time period was after the recession of 2001 and prior to the utter stupidity of the greed-fueled and subprime-financed housing bubble that peaked in 2005-2006).
Other good news is that home values appear to have stabilized. While the 12-month moving average of median home prices is still down 26.7 percent from the peak in July 2008, the latest 12-month moving average is essentially unchanged in the past four months. I am now confident that typical U.S. home values have stabilized and I expect them to remain relatively static for the next six months.
The bottom line is that the housing market finally is signaling improvement in the increased number of sales, declining months inventory and static prices. And this is all good news.