NAR, the National Association of Realtors, released the March Existing Home Sales data yesterday. For the past year, as real estate sales and prices collapsed in parts of the county (particularly the Sunbelt states in the south and west, plus California), the northeast region always seemed to be a bright spot in an otherwise dismal data picture. While sales and prices were down in the Northeast as well, this region typically outperformed the south and west. If not in both the percentage of sales decline and price decline, at least in one of those two.
Not so this month. The real estate slowdown has caught up with the northeast. While year-over-year, seasonally adjusted March sales were off 7.1% from March 2008 nationwide, in the northeast they were off 22.5%. (The west marked a stellar performance in this event, with an 18.9% year over year gain!)
On the price side, nationally the median sales price was down 12.4%, while in the northeast, we saw an 18.4% drop off.
The results, while sobering, aren't that surprising. The south and west took the hit first, a result of rampant speculation and overbuilding that led to a record number of foreclosures. As those foreclosures hit the market, they pummeled prices but have had the effect of luring buyers back into the market. So in many ways, while the downturn has been very painful in those regions, they are probably further along in the recovery process.
Most states in the northeast, by contrast, have far longer foreclosure processes. (In New York, it's often bandied about that it takes about 22 months to foreclosure on a house.) So foreclosures are just starting to have an impact on the regional market. Also, the fact remains that the northeast has not been as ripe for speculative overbuilding, so inventory overall may be more in line with actual demand. While these factors may soften the regional fall in the northeast, we're not out of the woods yet. I anticipate that the northeast regional will exhibit the three P's — piss poor performance — over the next few months of the existing home sales reports.
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