Existing home sales - trying to make a bottom

The National Association of Realtors reported a 0.4 percent increase in existing home sales from October to November. From year-ago levels, sales are down 20 percent and inventory remains unusually high.
Sales volume increased by 10.3 percent in the West after sharp declines during September and October in part due to tightening lending standards and higher rates for jumbo loans after the credit crunch that began in August. From year-ago levels, existing homes sales in the West are down 25 percent.

Inventory remains bloated, posting a 10+ month supply for the third consecutive month. The median home price rose 1.6 percent from October to November but now registers a 3.3 percent decline from November 2006.

Not surprisingly, NAR Chief Economist Lawrence Yun looked on the bright side:

“Near term, existing-home sales should continue to hover in a narrow range, just as they have since September, and that’s good news because it’ll be a further sign that the housing market is stabilizing,” he said. “Mortgage interest rates are near historic lows and the most current data shows decelerating price declines, along with a modest reduction in the number of homes on the market.”
...
“Just like the weather, there are large local variations in home prices,” Yun said. A quarterly examination of price performance on a metropolitan basis shows nearly two-thirds of metro areas are showing price increases. Among the many metros experiencing healthy local price gains are Farmington, N.M.; Reading, Pa.; Columbia, S.C., and Fargo, N.D.

For those of you thinking about taking the plunge and buying a place in the new year, don't confuse "stabilizing" sales with an imminent rebound in prices. Just for prices to stop falling, sales must increase and/or inventory must come down - you could see falling prices for years if sales and inventory stabilize at current levels which is the best "buyers market" in about a decade.

And look for that "quarterly examination of price performance on a metropolitan basis" quote to disappear from the NAR press release in another month or two - the most recent "quarter" is the third quarter which was pre-credit crunch and reflects a very different real estate market.