Mike Shedlock

Yesterday, headline news stories talked of a "rebound" in existing home sales and why rising inventory is good for the market.

Let's separate the hype from reality starting with the hype. Please consider Existing Home Sales Rebound, Inventory Increases.

U.S. home resales rose in April and the supply of properties on the market increased, suggesting the housing market was regaining its footing.

The National Association of Realtors said on Thursday existing home sales increased 1.3 percent to an annual rate of 4.65 million units, marking the second increase in sales in nine months.

Though an usually cold winter depressed activity, a dearth of homes for sale also stymied demand. Sales are expected to gradually trend higher for the rest of 2014 as job growth and the overall economy accelerate.

And there is reason to be optimistic. The inventory of unsold homes on the market increased 6.5 percent from a year-ago and the median home price increased at its slowest pace since March 2012.

The months' supply increased to 5.9 months, the highest since August 2012, from 5.1 months in March. Six months' supply is normally considered as a healthy balance between supply and demand.

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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