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Wednesday, October 26, 2011

House Sales: Distressing Gap and New Graph Gallery

by Calculated Risk on 10/26/2011 12:23:00 PM

I'm making a few changes. Now when you left click on a graph, you will see the large image of the graph and thumbnails of all graphs in the post below it. Click on the thumbnails to scroll through the graphs. This is very fast - and doesn't use the scripts in the previous graph gallery. Click on the "X" in the upper right to return to the blog.

In addition, I will keep the most recent graphs in a new graph gallery Here is the New Home sales gallery. It will take me a few weeks to add all the galleries to this new format.


The following graph shows existing home sales (left axis) and new home sales (right axis) through September. This graph starts in 1994, but the relationship has been fairly steady back to the '60s.

Then along came the housing bubble and bust, and the "distressing gap" appeared due mostly to distressed sales. The flood of distressed sales has kept existing home sales elevated, and depressed new home sales since builders can't compete with the low prices of all the foreclosed properties.

I expect this gap to close over the next few years once the number of distressed sales starts to decline.

Note: Existing home sales are counted when transactions are closed, and new home sales are counted when contracts are signed. So the timing of sales is different. Also the National Association of Realtors (NAR) is working on a benchmark revision for existing home sales numbers and I expect significant downward revisions to sales estimates for the last few years - perhaps as much as 10% to 15% for 2009, 2010 and 2011. Even with these revisions, most of the "distressing gap" will remain.

On September Home Sales:
New Home Sales increase in September to 313,000
• Last week: Existing Home Sales in September: 4.91 million SAAR, 8.5 months of supply