Tuesday, November 28, 2006

Briskly Eroding Home Prices Yield Market Stabilization?

Today, the National Association of Realtors released its monthly “Existing Home Sales” report for October along with some interesting analysis which again attempts to paint a picture of market stabilization.

As David Lereah puts it:

“The present level of home sales demonstrates some confidence in the market, but sales are lower than sustainable due to psychological factors,”

Additionally, NAR President Pat Vredevoogd Combs added:

“With the exception of parts of the West, sellers are cutting their price enough to encourage sales,” said Combs. “It’s an especially good market for sellers in areas with rising jobs and a growing population where prices remain moderate – those are the areas now with the strongest price growth.”

In reality though, October not only marked the seventh straight month of sales declines but also the greatest drop to median home prices on record EASILY BEATING THE PRIOR RECORD SET LAST MONTH.

Furthermore, October seemed to mark a turning point for median prices. Having taken a back seat to the whopping declines in sales seen in months past, median price declines are now escalating, showing the true ramifications of the prolonged fall off in home sales.

Additionally, this month virtually EVERY price and sales indicator was DOWN (with the exception of condos in the Midwest region) and EVERY inventory and supply indicator was UP, presenting more indisputable evidence that the housing market is declining dramatically and thoroughly across every region of the US.

There should be little doubt now that the housing market is experiencing a significant correction even when looking at a national scope.

The following shows the data form all the NAR reports released today consolidated into one view:

National Statistics (Year-Over-Year as compared to October 2005)

  • Median price of all existing homes declined by 3.5%
  • Median price of existing single family homes declined by 3.4%
  • Median price of existing condos declined by 5.3%
  • Sales of all existing homes (single family, condo, etc.) dropped 11.5%
  • Sales of existing single family homes dropped 11.0%
  • Sales of existing condos dropped 14.5%
  • Inventory for all existing homes increased 34.4% to 3,854,000
  • Inventory for single family homes increased 32.7% to 3,290,000
  • Inventory for condos increased 45.4% to 564,000
  • The number of months supply for all existing homes increased by 51.0% to 7.4 months.
  • The number of months supply for all existing single family homes increased by 50.0% to 7.2 months.
  • The number of months supply for all existing condos increased by a whopping 68.5% to 9.1 months.
Regional Statistics (Year-Over-Year as compared to October 2005)

Northeast

  • Median price of all existing homes declined by 5.2%
  • Median price of single family homes declined by 5.2%
  • Median price of condos declined by 4.0%
  • Sales of existing single family homes dropped 7.5%
  • Sales of existing condos dropped 16.4%

West

  • Median price of all existing homes declined by 0.6%
  • Median price of single family homes declined by 0.1%
  • Median price of condos declined by 12.2%
  • Sales of existing single family homes dropped 18.8%
  • Sales of existing condos dropped 15.8%

South

  • Median price of all existing homes declined by 7.0%
  • Median price of single family homes declined by 6.7%
  • Median price of condos declined by 12.1%
  • Sales of existing single family homes dropped 7.6%
  • Sales of existing condos dropped 19.8%
Midwest

  • Median price of all existing homes declined by 1.2%
  • Median price of single family homes declined by 2.2%
  • Median price of condos increased by 3.8%
  • Sales of existing single family homes dropped 10.7%
  • Sales of existing condos dropped 3.0%


Posted by at