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Existing home sales - more bottom talk, lower prices
Thursday, January 24, 2008
A short time ago, the National Association of Realtors reported that existing home sales fell 2.2 percent in December, following a slight increase in November, and that the inventory of unsold homes declined from 10.1 months to 9.6 months.
While the relative stabilization in sales volume and inventory is sure to elicit more calls that the "bottom in housing" has finally been reached, another important variable is nowhere near making a bottom and this one is much more important both to potential buyers and sellers - home prices.
As long as inventory is high and sales are low, prices will continue to fall.
With a full year of data now in for 2007, the median sales price of existing homes fell an even 6.0 percent, from $221,600 in December of 2006 to $208,400 last month. The median price of single-family existing homes fell for the first time in 40 years.
Price weakness was more pronounced in areas that saw the steepest price appreciation in recent years, the median price falling 11.1 percent in the West and 8.9 percent in the Northeast last year.
Lawrence Yun, NAR chief economist, said the market is experiencing uncharacteristic weakness. “Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate,” he said. “Home prices are lower, mortgage interest rates continue to decline and incomes are higher, but many potential buyers are delaying a purchase. The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets."
That was a remarkable lack of spin by Mr. Yun - people will be shocked.
7 comments:
Did someone see this? This is getting completely insane, the printing press will be very very busy.
http://biz.yahoo.com/ap/080124/economy_stimulus.html
“Both sides reached agreement to allow Fannie Mae and Freddie Mac — government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans — to buy loans much larger than the current $417,000 limit, aides and lobbyists said. Frank said that lending cap might reach as high as $700,000 in areas with the highest home prices.”
$700K for conforming??? This country is nuts.
you aint seen nuthin yet -- its an election year and this is just the beginning -- as tim said the other day, you don't hear anyone talking about how any of the stimulus gets paid for anymore
Many of us on this board will not qualified for the tax rebate since it seems it has a $150K income cap for a couple. The plan would also rebate people that pays no income tax. On top of that, I’m going to have to pay AMT again, what a country.
Economic stimulus money should not go to people who read this board anyway; it's counter to the goal of the government. The goal of stimulus is to give money to people who will immediately waste it in stupid stuff, creating economic "stimulus"; that means poor and dumb people. If any stimulus money finds its way into the hands of people who are financially non-retarded and/or remotely responsible, it's either a distribution failure or a side-effect of some republican's seemingly-outdated notions of fairness, equality, capitalism, and/or financial responsibility, all of which are shunned by all the stimulus plans.
Furthermore, as several people said, this is only the beginning. I'd be shocked if the government is not literally printing money to pay off home loans for morons with no business buying the home being paid off by the time this is done. This is an election year, and the democrats couldn't even spell financial responsibility, much less comprehend the long-term effects of printing money to appease their supporters.
I for one support our new socialist government (at least while I live in the US).
Curious about the declining sales and declining inventory. I realize people are pulling their homes off the market because they've given up but the rapid decline in sales should be building inventory one would think.
Plus, wouldn't declining sales each month automatically *raise* months supply since fewer homes are selling each month?
Another factor in the declining inventory may be that lenders aren't doing as many foreclosures and short sales in the forth quarter in order to put the best possible spin on 2007 earnings. We can't endanger those year-end bonuses for senior executives now can we?
If I'm right, inventory will head back up by spring.
Lawrence Yun is an honorable man. He would not lie to you or allow his opinions to be swayed by his own financial interests. Pretty soon sales will rise sharply, inventory will drop, and supply will be back down to a few months. Prices will resume their stunning trajectory and we will all get even richer. Wa, wa, wait a minute, is that the alarm clock I hear. Oh no! Now I have to wake up!
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