Existing Home Sales "Slipped" 23.4%
Existing-Homes sales "slipped" some in January, according to the National Association of Realtors (NAR). The problem, the Realtors point out, is simply that some potential buyers are waiting on sidelines.
Talk about an understatement. The "slippage" the NAR refers to was a 23.4% year-over-year freefall. The term "slip" might not adequately capture the data. Plummet, plunge, nose-dive, crash, tumble or freefall might work. But "Slip?" Gee, that doesn't quite capture the true essence of the data...
Delve beneath the national average into the details, and you find all manner of ugliness.
-Median existing-home price was $201,100 in January, down 4.6% from a year ago (National average)
-Total housing inventory rose 5.5%
-At the end of January, existing homes available for sale were 4.19 million, a 10.3-month supply at the current sales pace (up from a 9.7-month supply in December).
-Single-family home sold at an annual rate of 4.34 million in January. This is 22.4% below January 2007.
-The median existing single-family home price was $198,700 in January, down 5.1% from a year ago.
-Existing condominium and co-op sales dropped 6.5%, and are 30.2% below the year ago levels. The median existing condo price ($220,400) is only 1.0% lower than January 2007.
-Existing-home sales in the Northeast fell 3.6 percent to an annual rate of 810,000 in January, and are 25.7 percent below a year ago. The median price in the Northeast was $270,800, up 3.1 percent from January 2007.
The only good news in the report was found in the Midwest, where sales rose 3.4%, as the median price fell 4.0% ($154,200) from a year ago. Note that this was an area that was largely excluded from the real estate boom.
Existing Home Sales, January 2008
chart courtesy of Barron's Econoday
Source:
Existing-Homes Sales Slip in January as some Potential Buyers wait on Sidelines
NAR, February 25, 2008
http://www.realtor.org/press_room/news_releases/2008/ehs_homes_sales_slip2_25_08.html
Monday, February 25, 2008 | 10:41 AM | Permalink
| Comments (44)
| TrackBack (1)
add to de.li.cious | 
digg this! | 
add to technorati | 
email this post
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e55075c9bf8833
Listed below are links to weblogs that reference Existing Home Sales "Slipped" 23.4%:
» Existing Home Sales Hit 9-Year Low
from Unpartisan.com Political News and Blog Aggregator
Sales of existing homes fell to the lowest level in nearly a decade in January while the median pric [Read More]
Tracked on Feb 25, 2008 12:48:46 PM
Comments
yet another case of "it's not the apocalypse yet so let's juice the markets".
But you also know that if it were the apocalypse then it would be yet another bottom.
disgusting
Ciao
MS
Posted by: michael schumacher | Feb 25, 2008 10:51:31 AM
"No, no, no! Karl told me that things wouldn't fall apart until after I got out of office, and the blame could be placed on the next poor sap in the Oval Office!"
-- George W. Bush
Posted by: LFC | Feb 25, 2008 11:04:42 AM
Lowe's reported same-store sales declined 7.6% for the quarter. But sequentially sales are even worse:
Same Store sales fell 4% in November (YoY)
Same store sales fell 9% in December
Same store sales fell 11% in January
CEO said he was "a bit surprised" by the weakness.
Posted by: Robert A. Niblock | Feb 25, 2008 11:06:20 AM
Condo prices only 1% cheaper from January 2007? Here in SoCal, that sounds wrong. Then again, prices still aren't cheap enough for me to want to buy. I need about 25% off from current prices.
Maybe I'll miss a bottom and curse myself. But, I'll take that chance over trying to catch the falling knife.
Posted by: wunsacon | Feb 25, 2008 11:09:02 AM
Note that this was an area that was largely excluded from the real estate boom.
There is no such area. All that happened in those places was that the housing boom kept prices from going down more than they should have because of economic stagnation.
I live in CNY and everyone tells me how cheap housing is because I can get a 3/2 on a full acre for $225k. Until I point that I can rent a 3/2 on 10 acres for $900/month.
While out-of-staters may think prices are low, they are more than the local economy can support.
Posted by: Walker | Feb 25, 2008 11:18:26 AM
I know it's terribly old fashioned, but I still believe that home prices are a function of wages. Now that the appraisal liars are hiding and the cheap money is gone, determining the proper price for a house or condo is very simple: Multiply the average yearly salary in the area by 4. This is the price for an average house. If you have a lot of extra square feet or land, the price goes up. Take Springfield, Ohio. They have 10% unemployment. The last time they had 10% or greater unemployment was during the great Depression. Get on Google Earth and look at those big mansions northeast of the city near the lake. You want a steal? Have you got a job?
The excretion is hitting the rotary oscillator and it's not just flowing down hill.
Posted by: AGG | Feb 25, 2008 11:25:22 AM
"'Tis but a scratch!" -- The Black Knight
Posted by: ThatGuy | Feb 25, 2008 11:39:28 AM
The big declines in home sales were in the middle of 2007. Recently, sales do seem to have flattened out a bit. On a three-month average (which smooths some of the monthly volatility and statistical noise), sales are falling at a 13% annual pace now, compared with 40% in October. For single-family homes, the decline in 8% annualized, instead of 39%.
If prices fall enough, buyers could drift back.
The time for "plunging" sales has probably passed, unless something horrible happens to the conforming mortgage market. For the next few years, we'll have to get used to "slipping" or "slowly rising" sales.
The bottom is going to be very very wide.
Posted by: rex | Feb 25, 2008 11:43:48 AM
Multiply the average yearly salary in the area by 4. This is the price for an average house.
Rent x 120.
Rents track wages better than housing prices. This also allows you to evaluate individual properties, instead of just determining the average home price.
Posted by: Walker | Feb 25, 2008 11:44:58 AM
On a three-month average (which smooths some of the monthly volatility and statistical noise), sales are falling at a 13% annual pace now, compared with 40% in October.
A 3-month moving average is insufficient analysis for a market that is well established to be seasonal. You are comparing fall (actually closings started in later summer) with winter.
But if you want to buy, go right ahead...
Posted by: Walker | Feb 25, 2008 11:47:33 AM
Gotta love the disconnect of the markets. They rise how much thinking that this data tells them the housing bottom is near. Talk about living in a world of denial.
Posted by: Joe Klein's conscience | Feb 25, 2008 11:49:49 AM
East & West Coasts get the best of times but also the worst of times. We here in the Midwest have a modest lifestyle and modest wages but we rarely have to ride the rollercoaster quite as much as the coasts do.
Posted by: JST | Feb 25, 2008 11:50:55 AM
Walker,
Rent X 120? I assume you are talking about monthly rent. If you rent a house for $900 a month, that only comes to $108,000. I think that's too low.
Also if a manufactured home rents for $900 a month, it would be worth $108,000. That's too high. Responsible banks used to allow a max of 38% of wages for a monthly payment including other liabilities like car payments in the 38%. Maybe we'll go back to that.
Posted by: AGG | Feb 25, 2008 12:07:30 PM
Walker: You are right, but exaggerate a bit. I live in the midwest in missouri. Yes, prices here seem high to locals but low to out-of-towners. That being said, I didn't see any property values double or triple in value.
Remember, its supply and demand, and with lots of land out here (vs Manhattan island, for example), there's plenty of supply to keep prices stable over the longhaul.
Posted by: Joe | Feb 25, 2008 12:07:39 PM
"...The problem, the Realtors point out, is simply that some potential buyers are waiting on sidelines."
I think that's commonly called a buyer's market!......as in waiting for prices to fall further
Posted by: glenn_in_MA | Feb 25, 2008 12:07:42 PM
Sheez, since when is the price of housing going down a bad thing?
Too many rentiers and not enough worker bees in this society, IMO.
Posted by: Troy | Feb 25, 2008 12:13:28 PM
Walker,
I agree it all comes down to supply and demand.
I'm in Vermont and prices here are unreasonable compared to the "show me" state. I expect prices to start coming down faster here.
By the way, the 3.6% increase in the northeast is misleading. The middle clas has stopped buying so the dollar numbers look higher but the mansion prices are tumbling.
Posted by: AGG | Feb 25, 2008 12:21:37 PM
Barry: have u changed your mind about the PPT after friday's rally? and i know the market's mixed to down today, but friday served to stop what looked like a PLUNGE. Faber's comment on accelerated discount selling of banks' leveraged loans had to be countered by right-wing flak/conduit Gasparino. that was simply cover for the operation. no?
Posted by: scorpio | Feb 25, 2008 12:24:27 PM
Let's see...housing inventory was up 5.5% while housing prices fell 4.6%? I think until those figures reverse themselves substantially there is no bottom and we aren't even close to it, yet.
Posted by: Pat G. | Feb 25, 2008 12:29:55 PM
That last chart from Barron's is not up to date. The rate on 30-year conforming loans jumped back over 6% last week, according to Freddie Mac.
Posted by: Bob_in_MA | Feb 25, 2008 12:30:09 PM
I'm not so sure "slipped" isn't the right word, as in, sales slipped on the CDO peel, tumbled down the staircase of the vacant, reposessed house, and broke its bloody neck.
Posted by: Winston Munn | Feb 25, 2008 12:31:16 PM
I mentioned this on CR. I think that there are at least half a million more homes that the owners would like to sell but aren't on the market right now for a lot of reasons, negative equity, dead local market, etc...
There is most likely more than a year of inventory.
Posted by: edhopper | Feb 25, 2008 12:54:09 PM
i would like to add that there must be atleast couple million people like me waiting to buy......afraid of catching a falling knife...
once gov comes with some other plan to promote home owner ship..(how abt atleast 100k in mortgage principal also being tax deductible in the next five years?) or housing starts going up....i will buy something in the range of 4 times average houisehold income (available in good locations in my small town, Birmingham, AL).
Posted by: techy | Feb 25, 2008 1:09:41 PM
Given the general economic/business news coming out re: store closings, bankruptcies, consolidations, postponed commerical development projects, etc. etc., layoffs and reductions in working hours are only going to accelerate in the next few months. Under those conditions there's no way that the housing market is going to level off. If there's a meltdown involving AMBAC/MBIA, look out below.
Posted by: bluestatedon | Feb 25, 2008 1:29:46 PM
Techy,
Don't you read the Birmingham News? All real estate is local, and besides, Birmingham's economy is "decoupled" from the rest of the country's. Yeah, seems in this internet age, everyone, from the United States on down to Birmingham, Alabama want to claim that they aren't really as well connected as it appears.
At least that's what all my realtor buddies are saying. I say sit tight for at least another year and half--Birmingham isn't decoupled, it's just about six-nine months behind what's happening elsewhere (as usual), and elsewhere things are not pretty.
I live in Homewood. Don't buy anything here...
Posted by: Don | Feb 25, 2008 1:33:28 PM
