Existing Home Sales Are Down in July
Existing home sales, which comprises the lion’s share of the home sales, is down again in July according to NAR. Existing home sales are down 9.2% from July of last year. As an aside new home sales were down 10.2% from the same period last year. The disturbing number is that the inventory is up to 9.6 month supply. This will only get worse as the market moves into the slower fall and winter months, plus the next big surge of ARM re-sets occurs from October through February. It would not be surprising to see the inventory number approach 11 or 12 months.
Another thing that should be considered, but is difficult to quantify is shadow supply. Those the are people that want to sell, but have pulled their homes off the market due to market conditions. When you consider, the inventory, potential inventory from the ARM resets over the next 6 months, shadow supply, illiquidity in the mortgage markets, tougher underwriting criteria, and the effect that all of this will have on the economy it is difficult to be optimistic until 2009 at the earliest and more than likely it will be 2010 before the market bottoms out.
Total existing home sales, including single-family, townhomes, condominiums and co-ops – slipped 0.2 percent to a seasonally adjusted annual rate1 of 5.75 million units in July from an upwardly revised pace of 5.76 million in June, and are 9.0 percent below the 6.32 million-unit level in July 2006.
The national median existing-home price2 for all housing types was $228,900 in July, down 0.6 percent from July 2006 when the median was $230,200, the highest monthly price on record. The median is a typical market price where half of the homes sold for more and half sold for less.
Total housing inventory rose 5.1 percent at the end of June to 4.59 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, up from an upwardly revised 9.1-month supply in June.