by Bill McBride on 7/23/2010 05:11:00 PM
Friday, July 23, 2010
It might be a little surprising, but existing home sales are still above the historical median level of the last 40 years as a percent of owner occupied units ...
Click on graph for larger image in new window.
The first graph shows existing home sales on an annual basis, and end of year inventory. For 2010, sales are estimated at 5.0 million units and year end inventory at 3.4 million units (currently 4.0 million in June, but inventory will decline seasonally).
The second graph shows the same information normalized by the number of owner occupied units.
Because of the high number of low end foreclosures (investor buying), and various government programs (tax credit, etc.) the number of existing home sales have stayed fairly high.
The median for sales is about 6.1% of owner occupied units or currently about 4.6 million sales per year.
The median for inventory is about 3.1% of owner occupied units or just over 2.3 million units (about 6 months of inventory).
As distressed sales move into the mid-to-high priced areas and investor activity declines, I expect turnover will slow, and overall sales will probably decline to the median level over the next year or two. This is below most forecasts ...
The NAR forecast for 2011 is 5.6 million existing home sales. So I'll take the under.