Monday, January 21, 2013

2012 Preliminary Existing Homes: Sales up about 9%, Inventory down 19%

by Bill McBride on 1/21/2013 03:35:00 PM

As a follow up to the post on New Home sales ... On Tuesday, the NAR will release the Existing Home Sales report for December. It looks like sales will be up over 9% in 2012, and inventory will be off over 19%.

One of my 10 question for 2013 was: Question #8 for 2013: Will Housing inventory bottom in 2013?. Here was my conclusion:

If prices increase enough then some of the potential sellers will come off the fence, and some of these underwater homeowners will be able to sell. It might be enough for inventory to bottom in 2013.

Right now my guess is active inventory will bottom in 2013, probably in January. At the least, the rate of year-over-year inventory decline will slow sharply. It will be very interesting to see how much inventory comes on the market during the spring selling season!
I'm looking at some data for clues if inventory is now at or near the bottom (I'll have more later today or this week).

This table shows the annual sales rate, inventory, and months-of-supply for the last six years (2012 estimated). Note that inventory and months-of-supply are for December.

Existing Home Sales
Annual SalesAnnual ChangeAnnual InventoryAnnual ChangeMonths-of-Supply
20075,040,000 3,520,000 8.9
20084,110,000-18.5%3,130,000-11.1%10.4
20094,340,0005.6%2,740,000-12.5%8.8
20104,190,000-3.5%3,020,00010.2%9.4
20114,260,0001.7%2,320,000-23.2%8.2
120124,660,0009.4%1,870,000-19.4%4.5
1 Estimates for 2012

Existing home sales did not collapse as far as new home sales because of all the distressed sales. As the number of distressed sales declines, new home sales will increase - and it is possible that total existing home sales will stay flat or even decline. That will not be bad news for the housing market - the key is that the number of conventional sales has been increasing.

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