Existing Home Sales Down, Philly Fed Way Down

The National Association of Realtors reported that May home sales fell 1.5 percent to an annual rate of 4.55 million, down from a rate of 4.62 million in April, but that the median price jumped from $177,400 to $182,600, up nearly 8 percent from a year ago, a key reason being that inventory remains relatively low.

As traditional buyers return to the market in late-spring and investors begin to exit, distressed home sales fell from a 28 percent share to 25 percent, some 15 percent of these being foreclosures with a 10 percent contribution from short sales selling at 19 percent and 14 percent below market value, respectively.

But, surely the more important story this morning is the plunge in business conditions in the mid-Atlantic area as the Philadelphia Fed index tumbled from -5.8 in May to -16.6 in June, the weakest reading since last September when the nation was in the grips of the debt-ceiling crisis.

Recall that numbers above and below zero indicate expansion and contraction, respectively, so this marks the second straight month of sharply deteriorating conditions.

The key new orders index fell from -1.2 to -18.8 and shipments dropped from +3.5 to -16.6 while the average employee workweek index fell from -5.4 to -19.1. About the only positive development was that the number of employees index rose from -1.3 to +1.8. This was pretty bad…