Wednesday, October 25, 2006

NAR: Sales Down, Prices Down

by Bill McBride on 10/25/2006 09:37:00 AM

The National Association of Realtors (NAR) reports: September Existing-Home Sales Ease

UPDATE: For fun, here is an alternate NAR press release:

Sales plummeted 16.3% from September 2005. This is a record YoY Sales decline.

Median Prices dropped 2.2% from September 2005. Bloomberg: "... the biggest year- over-year decline since record-keeping began in 1969."

NAR changed the SA factor for September. Using the old SA factor, sales were 6.02 million SAAR, as compared to the reported 6.18 million SAAR. SA sales are now at mid-2003 levels.
And here is the actual press release:


Click on graph for larger image.
Existing-home sales eased last month, as did the number of homes available for sale – indicating the housing market is stabilizing, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – dipped 1.9 percent to a seasonally adjusted annual rate of 6.18 million units in September from a level of 6.30 million in August, and were 14.2 percent below the 7.20 million-unit pace in September 2005, which was the third strongest month on record.
David Lereah, NAR’s chief economist, said stabilizing sales should build confidence in the housing market. "Considering that existing-home sales are based on closed transactions, this is a lagging indicator and the worst is behind us as far as a market correction – this is likely the trough for sales," he said. "When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market, and sales will be at more normal levels in the wake of the unsustainable boom that we saw last year." He noted sales already are improving in some areas.

Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.
NAR President Thomas M. Stevens from Vienna, Va., said the industry is encouraged that the number of homes on the market is starting to decline. “It appears we have passed a cyclical peak in terms of the number of homes on the market,” said Stevens, senior vice president of NRT Inc. “The good news is that fewer new listings are coming online. A stable sales pace is expected to draw down the number of listings to a supply balance that will support positive price growth within a few months. Taking the long view is always the best way to approach housing decisions, and right now, buyers are in a very favorable market.”

With the market in transition, the national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005 when the median was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less.
Existing Home Sales are a trailing indicator. The sales are reported at close of escrow, so September sales reflects agreements reached in July and August.

As I've noted before, usually 6 to 8 months of inventory starts causing pricing problem - and over 8 months a significant problem. With current inventory levels at 7.3 months of supply, inventories are now well into the danger zone and prices are falling in most regions.