Existing Home Sales Lowest Since 1997

Stocks drop to session lows as a dismal existing home sales report hits the wires at 10:00 AM ET, Feb. 25.

January existing homes sales dropped to a seasonally adjusted annual rate of 4.49 million from 4.74 million, which was well short of the 4.79 million consensus estimate. This marks a decline of 5.3% compared to last month and 8.6% compared to the previous year Consumers remain hesitant to buy homes in the face of declining wealth and plummeting home prices. At the same time, credit standards are tighter, so fewer people that want to purchase a home are able to obtain financing.

Many of the sales were distressed, which is foreclosed properties or a short-sale. Nationwide, the National Association of Realtors said 45% of January sales were distressed. This contributed to a 14.8% year-over-year drop in the median home price. The month's inventory supply rose only slightly to 9.6 months from 9.4 months, but that is only because more people gave up on trying to sell their homes.

Overall housing inventory levels are at historic highs, according to Q4 census bureau data, so it's likely that the housing market will remain weak for an extended period of time.

Real estate services stocks are down 10.6%.

Just reported, oil inventories rose by 717,000 barrels, which was smaller than the expected build of 1.3 million. Oil prices rose following the release, currently up 2.4% to $40.88 per barrel.

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