Tuesday, November 28, 2006

NAR: Sales Up, Inventory Up

by Bill McBride on 11/28/2006 10:26:00 AM

The National Association of Realtors (NAR) reports: Existing Home Sales Rise in October, Market Stabilizing

Click on graph for larger image.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 0.5 percent to a seasonally adjusted annual rate1 of 6.24 million units in October from an upwardly revised pace of 6.21 million in September, but were 11.5 percent below the 7.05 million-unit level in October 2005.
Total housing inventory levels increased 1.9 percent at the end of October to 3.85 million existing homes available for sale, which represents a 7.4-month supply at the current sales pace.
Existing Home Sales are a trailing indicator. The sales are reported at close of escrow, so October sales reflects agreements reached in August and September.

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 7.4 months of supply, inventories are now well into the danger zone and prices are falling in most regions.