by Calculated Risk on 2/26/2010 10:00:00 AM
Friday, February 26, 2010
Existing Home Sales Decline Sharply in January
The NAR reports: Existing-Home Sales Down in January
Existing-home sales – including single-family, townhomes, condominiums and co-ops – dropped 7.2 percent to a seasonally adjusted annual rate1 of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5 percent above the 4.53 million-unit level in January 2009.
Total housing inventory at the end of January fell 0.5 percent to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December.
![Existing Home Sales](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnMjDpKCrn0_JKXfYNkVnJ3jbTW4yqHd8Q3vuFMR5_V0ZqJ-ILYS3quTpSlPEqwCQxNKLmsKGLO3o4huOGdBK143h5dcZpEKZqAfQ_Ec0pomkTs0QmMxYlRidaA6Ohji6WPyyT/s320/EHSSalesJan2010.jpg)
This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.
Sales in Jan 2010 (5.05 million SAAR) were 7.2% lower than last month, and were 11.5% higher than Jan 2009 (4.53 million SAAR).
This is a sharp drop from November when many of the transactions were due to first-time homebuyers rushing to beat the initial expiration of the tax credit (that has been extended). That pushed sales far above the historical normal level; based on normal turnover, existing home sales would be in the 4.5 to 5.0 million SAAR range.
![Existing Home Inventory](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1Pkz6k3ClpOWMorLzFb54R6IIIAc1_XjS0b7PfmiSnpF3jZe4CCuXD0_jFmaNNIqCOwGXHz46F3GSaDADj_qqEGX8vU5Q3-o9e_wLJXXVuPAaa1oThqQPDz6BE_YurPM0Hw9z/s320/EHSInventoryJan2010.jpg)
This is not seasonally adjusted and this decline is mostly seasonal - inventory should increase in the Spring.
![Existing Home Sales Months of Supply](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikKDJ3sFGxFao5KuMv2go8nLytVu_TMn6c1_4KhdFLb9X2Dwq2apjogv3kAm-NeVFN_fSnzl3y_B6nzwqm9qwoH2x6L2IGTpFHMqcKPxSCHKsBJLFC3ZAimdgRn9-2eXdaenuC/s320/EHSMonthsJan2010.jpg)
Months of supply increased to 7.8 months in January.
A normal market has under 6 months of supply, so this is high - and probably excludes some substantial shadow inventory.
I'll have more later ...