Existing home sales came in at a seasonally-adjusted 5.03MM rate, easily beating the Street's 4.70MM estimates; up 7.7% from July and 18.6% Y/Y. Lower prices, which were 5.1% below last year were likely the driver of such growth. However, we remain pessimistic regarding the real-estate market (as we have for a few years) as majority of the growth were for homes priced between $100K and $250K. In addition, a sizable chunk of the sales, 22%, were investors; all-cash buyers were 29%, up from last year's 28%. First-time buyers represented 32% of the purchases in August, unchanged sequentially and up from last year's 31%. Inventory remained at high levels historically, although it did dip to an 8.5 months supply from 9.5 in July. Maybe those builders with surprising number of building permits are beginning to see some indications of demand pickup. However, we note that it is still a bad market (or shall we say buyer's market ... for the buyers with the income, savings and cash) with prices being pressured, combined with unemployment at high levels, continuing deleveraging per household, no growth in wages and lack of savings, it is tough to think of the August data as a trend and assume it will continue. If we do see another blip, then a lot of properties may be dumped onto the market as investors made up more than one-fifth of purchases made in August and they may just want to get them off their hands. And let's not forget continuing foreclosures. We always hope for the best but take the worst into account.
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