The housing mirage

http://www.businessweek.com/bwdaily/dnflash/content/jun2007/db20070626_408546.htm?chan=top+news_top+news+index_businessweek+exclusives Like a mirage in the desert, the bottom of a housing slump seems to fade in and out of sight as the year progresses. Home sales jump, and there - you think you can make it out in the distance. Home sales fall, and it is lost in the haze. Spirits had been higher in April, when sales of new homes jumped 13%, as builders whittled away at huge inventories with aggressive pricing. The median price of a new home dropped 11% in April from the previous month, to $229,100, the biggest decline since 1970. In the last week of June, at the very end of what are traditionally the strongest three months for home sales, we learned that both existing- and new-home sales remained sluggish in May. On June 25, the National Association of Realtors said the rate of existing-home sales slipped 0.3% in May, to an annual pace of 5.99 million units, while supply climbed to 8.7 months, the highest reading since June, 1992. The next day, the U.S. Census Bureau said sales of new single-family homes fell 1.6% in May, to a seasonally-adjusted annual rate of 915,000 units. New-home supply edged up to 7.1 months from 7 months in April. The May home sales news, combined with homebuilder Lennar's (LEN) weaker-than-expected earnings announcement on May 26, dashed any remaining hopes of an imminent end to troubles in the housing market.