Monday, November 24, 2008
The NAR (National Association of Realtors) reported a setback in existing home sales during October in what increasingly appears to be an extended period of "clunking along a bottom" that began forming last year. Home prices are another matter entirely.
The median price for existing homes dropped to $183,300 in October, down a whopping 11.3 percent from a year ago, taking home prices back to levels last seen in 2004.
Of course, the NAR blames distressed sales and the unusually large number of lower-end homes being sold for the big price decline, citing "distortion" in the data. While these factors surely played a big role, it's not like you can just dismiss them either and go on thinking that home prices, in the aggregate, are not tumbling in a big way.
Many sellers will be comforted to learn of this "distortion" in the price data and blithely go on attempting to sell their homes for unrealistic prices.
Interestingly, NAR cheif economist Lawrence Yun cites the stock market and the economy as the proximate causes for weakness in the housing market:
Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions. We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery.Maybe, just maybe, plunging home prices are also playing a role in the reluctance of potential buyers to ... errrrr ... take the plunge.