Housing numbers surprisingly positive...

"A Sign that Housing Fears are Overblown"

February existing home sales unexpectedly jumped 3.9% to a 6.69 million annual rate. A decline was expected after a similar January increase. This is a very strong number and keeps home sales well above the recent bottom. October sales were at a 6.27 million annual rate, November 6.25, December 6.27, January 6.44, and now February checks in at 6.96.

The median price of homes sold was down 2.3% from a year ago. This is not particularly distressing, as it is less than the 3.1% drop last month. Even with stable home sales, the median price is likely to remain flat to negative for quite a while.

The sales jump isn't going to completely end fears that the housing market will ultimately lead to a recession, but it will end a lot of the current talk. It could be a mixed blessing for the stock market in that a stable housing market greatly reduces the rationale for any Fed easing. Nevertheless, it is a very healthy sign for the economy in that it appears that even though new home sales and construction are weak, there clearly is continuing demand in the housing market.

There are, of course, fears that problems in the subprime mortgage market will lead to fewer home sales in the months ahead but there is as of yet no evidence of that. New home sales data, which run near a 1.0 million annual rate, will be out on Monday. The new home market has been subject to more difficulty than the market for sales of existing homes.

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