by Calculated Risk on 10/25/2010 11:22:00 AM
Monday, October 25, 2010
Earlier the NAR released the existing home sales data for September; here are a couple more graphs ...
The first graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Inventory is not seasonally adjusted, so it really helps to look at the YoY change.
Click on graph for larger image in new window.
Although inventory decreased slightly from August 2010 to September 2010, inventory increased 8.9% YoY in September. This is the largest YoY increase in inventory since early 2008.
Note: Usually July is the peak month for inventory.
The year-over-year increase in inventory is very bad news because the reported inventory is already historically very high (around 4 million), and the 10.7 months of supply in September is far above normal.
And double digit months-of-supply suggests house prices will continue to fall.
By request - the second graph shows existing home sales Not Seasonally Adjusted (NSA).
The red columns are for 2010. Sales for the last three months are significantly below the previous years, and sales will probably be well weak for the remainder of 2010.
The bottom line: Sales were weak in September - almost exactly at the levels I expected - and will continue to be weak for some time. Inventory is very high - and the significant year-over-year increase in inventory is very concerning. The high level of inventory and months-of-supply will put downward pressure on house prices.