Highlights
A disappointing existing home sales report shows a 5.3 percent drop in January to a 4.490 million annual unit rate. Supply on the market remains extreme, at 3.6 million units for 9.6 months of supply vs. 9.4 months in December.

Home price contraction remains the single greatest threat to the economy. The median price of an existing home fell 3.1 percent in January to $170,300 for a 14.8 percent year-on-year decline. Falling home prices will limit government efforts to stem foreclosures.

Other details include regional sales with the Northeast showing the greatest weakness, down 14.7 percent in the month for a year-on-year decline of 23.8 percent. The West, which had been hard hit in prior months, is now the best performing region with sales unchanged in the month and up 29.0 percent on the year. Las Vegas showed exceptional strength in January.

Stocks slipped in immediate but limited reaction to the results. The markets may look past, at least for a while, weakness in home data on the prospect that government efforts to help the housing sector will soon show results. New home sales data for January will be released tomorrow.

Market Consensus before announcement
Existing home sales unexpectedly jumped 6.5 percent in December to a 4.740 million unit annual rate. But it is hard to say that the gain was real. Certainly, there is the argument that lower mortgage rates and lower house prices are now boosting home sales. But an alternative view is that large seasonal factors during winter months artificially boosted very modest actual gains in sales. Housing related statistics are notoriously unreliable during winter months. Based on this latter view, look for sales to head back down in January. The Administration's tax incentives for boosting home sales are likely to help but that is a few months down the road as homebuyers are just now starting to mull their impact on the decision to buy while still worrying about tighter credit and possible job loss.

Existing home sales Consensus Forecast for January 09: 4.80 million-unit rate
Range: 4.55 to 4.91 million-unit rate

2009 Release Schedule

Released On: 1/26 2/25 3/23 4/23 5/27 6/23 7/23 8/21 9/24 10/23 11/23 12/22 Release For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov