An "existing home" is a home that cannot be considered new construction; a resale of an existing home. Existing Home Sales fell 2.2 percent in May.
The press is calling the drop in sales "unexpected" and disappointing, but a deeper look at the data shows the news isn't as bad as it first appears.
First, on a regional basis, sales were mostly solid. Only the Northeast region posted a loss. The West even managed a gain.
- Northeast : -18.3 percent
- Midwest : 0.0 percent
- South : +0.5 percent
- West : +4.9 percent
By comparison, in 2008, the average existing home inventory was 10.4 months.
And, lastly, in May, first-time home buyers represented 46 percent of all buyers. The number was likely buoyed by the tax credit program but that doesn't damper the fact that first-time buyers provide a support floor for the housing market. Keep in mind that, in a 'normal' market, first time homebuyers make up about 1/3 of homebuyers.
First-time buyers in Denver enable "existing owners" to move-up to bigger homes, which, in turn, trickles up to the mid-size and jumbo markets.
Analysts expected more from May's numbers and that may explain why the reaction to the data is generally negative. However, in many cities, home resales did just fine.