Tuesday, December 23, 2008

Even More on Home Sales

by Bill McBride on 12/23/2008 04:23:00 PM

Lots of housing news today ...

New Home Sales Lowest since 1982

Existing Home Sales Plunge

And here is an analysis of existing home turnover (not pretty), and NSA data showing the existing home sales plunge was worse than the headline number.

And now some more graphs ...

New and existing Home Sales Click on graph for larger image in new window.

This graph compares New and Existing home sales. Although sales tracked pretty well from 1994 through 2005, existing home sales have outperformed new home sales for the last few years.

One of the key reason for the difference is lender REO sales (foreclosure resales).

From the NY Times:

Lawrence Yun, chief economist of the National Association of Realtors, said that 45 percent of all home sales in November were so-called “distressed sales,” meaning that the sellers faced foreclosure, or they were forced to sell their home for less than the value of the mortgage.
If we remove REOs, existing home sales have tracked much closer to new home sales. REO sales are real sales, but this shows as long as the REO volume is high, new home sales (and non-REO existing home sales) will be under severe pressure.

The following graph shows both annual new home sales (from the Census Bureau) and sales through November.

New Home Sales AnnualIn 2008, sales through November (before revisions) have totaled 461 thousand. This is slightly behind of the pace in 1991 (471 thousand sales through November).

However sales slowed in the 2nd half of 2008, and it definitely appears that annual sales will be below the 509 thousand in 1991. This would mean sales would be the lowest since 1982 (412 thousand).

Of course the U.S. population and the number of households were much lower in 1982. In 1982 there were 54.2 million owner occupied units in the U.S., in 1991 there were 61.0 million, and there are approximately 76 million today.

If we use a ratio of owner occupied units to compare periods, the low in 1982 was 412 thousand X (76/54.2) = 578 thousand units (based on the number of owner occupied units today).

The calculation for 1991 gives 634 thousand units (to compare to today).

By this measure, 2008 is the worst year for new home sales since the Census Bureau started tracking new home sales (starting in 1963).