Steel Markets

Existing Home Sales Plunge 7.1% in February
Written by Sandy Williams
March 22, 2016
Existing home sales took a surprising 7.1 percent plunge in February to an annualized rate of 5.08 million according to data from the National Association of Realtors. Higher prices and tightening supply were blamed for the apparent cooling of the housing market.
Supply was at 4.4 months in February, well below the “normal market” of about six months. Median pricing for all housing types was $210,800, up 4.4 percent year-over-year and the 48 consecutive month of gain.
Lawrence Yun, NAR chief economist, says existing sales disappointed in February and failed to keep pace with what had been a strong start to the year. “Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest,” he said. “The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings. However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”
Worries about a slowing economy may also be holding back buyers said Yun. In a recent NAR survey, fewer respondents believe the economy is improving and fewer renters think it is a good time to buy a home.
“The overall demand for buying is still solid entering the busy spring season, but home prices and rents outpacing wages and anxiety about the health of the economy are holding back a segment of would-be buyers,” says Yun.
Single-family housing slid 7.2 percent from January to a seasonally adjusted annual rate of 4.51 million. Median price rose 4.3 percent y/y to $212,300.
Existing condominium and co-op sales decreased 6.6 percent to a seasonally adjusted annual rate of 570,000 units. The median existing condo price was $198,900 in February, which is 5.1 percent above a year ago.
All four U.S. regions reported lower sales in February with transactions falling by double digit percent in the Northeast and Midwest.
Sales in the Northeast saw the biggest plunge, down 17.1 percent to an annual rate of 630,000. Midwest sales fell 13.8 percent to an annual rate of 1.12 million. Median home price declined 0.8 percent y/y in the Northeast but grew 6.3 percent in the Midwest.
Existing-home sales in the South decreased 1.8 percent and 3.4 percent in the West. Median home price was up 5 percent y/y in the South while median price in the West was 7.0 percent higher.
The National Realtor’s Association noted that investor purchase of lower priced homes for conversion to rental units has created an additional roadblock for first-time buyers. With less distressed inventory on the market, investor sales have trended higher in recent months after falling to a low of 12 percent of sales in August 2015.

Sandy Williams
Read more from Sandy WilliamsLatest in Steel Markets

Week in Review: Sept. 29 -Oct. 3
Let’s take a quick tour of some key stories from SMU in the week of Sept. 29 - Oct. 3.

Hot-rolled coil sources lament stagnant conditions
Participants in the hot-rolled sheet market expressed frustration with the continuing lack of demand this week.

Plate market sources critique mill hikes amid current market conditions
Following spot market plate price increase notices issued by domestic mills this past week, participants are contemplating the rationale behind the increases and whether they will stick. Some sources anticipate that current market conditions will shift in November and believe the increases may set a new "pricing floor."

ITC’s final ruling: Dumped, subsidized CORE imports are harming domestic market
The US International Trade Commission (ITC) finds that corrosion resistant steel (CORE) imports from 10 countries have caused material damage to domestic product producers, according to the ITC’s statement.

HR buyers report mixed market conditions
Hot-rolled coil market participants said they’re staying on their toes amid a market that continues to be characterized by uncertainty. A veteran Midwest-based service center operator contends that current conditions are unprecedentedly volatile. Being flexible with customers and strategic with mills is the only way to navigate through the uncertainty, he said. “No one wants […]