Prices Fall, Inventories Rise, NAR Spins

Ushmsales112807Sales of existing homes fell to a record low in October. What was the largest drop in home prices — ever
— wasn’t enough to revive sales.

Inventory levels also climbed to record highs.

The data highlights:

• The national median existing-home price (All housing types) was
$207,800 in October — down 5.1% year over year (October 2006 = $218,900)

• Total housing inventory rose 1.9% to
4.45 million existing homes. This represents a
10.8-month supply. Inventory rose 1.9% for the month.

• Single-family home sales were down an astonishing 20.8% from October 2006.

• The median
existing single-family home price was $205,700 in October, down 6.3%
from a year ago.

• Existing condominium and co-op sales fell 20.2 % percent from October 2006; they are off 9.1% from last month. 

• The median existing condo price was $223,500 up 4.9% percent from a year ago.


Chart courtesy of NAR, Lehman Brothers via Real Time Economics


Of course, the biggest laugh was the National Association of Realtors headline: Mixed Results For October Existing-Home Sales; Mortgages Improving. 

If by mixed you mean a combination of terrible and horrible, then I guess its mixed.

Rex Nutting pulled this gem of a quote:

The fundamentals of the market don’t support a further
decline in sales, said Lawrence Yun, chief economist for the NAR, who
said low mortgage rates and job growth should keep sales from falling.
While the subprime mortgage market has disappeared, the Federal Housing
Administration is picking up its lending.

"I don’t anticipate any
further major sales declines," Yun said. If sales do continue to fall,
"it would be a major concern" and "would raise the risk of an economic

Its worth reminding readers that Yun (nor his predecessor, the oft-hallucinatory David Lereah), have never in the past anticipated any sales decline.

If they were completely honest about this failure of expectations (rather than shilling for a clown outfit) the monthly commentary would read: "Geez, sales fell again? Wow, we didn’t see THAT coming. No worries, next month should be fine . . ." >


Mixed Results For October Existing-Home Sales; Mortgages Improving
NAR, November 28, 2007

Supply of homes on market at 22-year high
Rex Nutting
MarketWatch, Last Update: 10:14 AM ET Nov 28, 2007

See also:
Study Warns of Decline In Value of Homes
WSJ, November 27, 2007 5:57 a.m.

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What's been said:

Discussions found on the web:
  1. Marcus Aurelius commented on Nov 28

    This is a clear signal to the Homebuilders to begin the next round of development and construction of condos.

  2. michael sshumacher commented on Nov 28

    Honestly I went looking for any news or information that would be worthy of a 200 pt whoosh on the Dow and over 60 on NAS.

    All I could find was that yet another Fed Gov. indicated we “might” get a rate cut.

    Seriously is that it????

    Is it that easy to use chinese money to bloat it back up again???

    Almost 500 points on bailouts and rate cuts.

    Utterly hillarious and at the same time ridiculous.

    I guess those traders REALLY want that bonus


  3. techy2468 commented on Nov 28

    Off Topic:

    looking at the rally of past two days.

    i am new to stock market, hence i am trying to make some sense of it.

    is it possible that we may be in bear market, where Shorts always oversell to new bottoms and then they have to cover it up leading to big jumps, and then back to selling short on bad news….and game continues

    the above looks a bit similar to a bull market where everyone go into buying frenzy, pushing the price up, then people take profits and we get small corrections.

    i wish there was a forum where i can discuss things like these.

  4. techy2468 commented on Nov 28


    if you do not mind, do you have money invested in the market right now?

    i am new to trading, hence i am totally in cash right now, these 10% weekly swings dont make much sense to me.

  5. Donny commented on Nov 28

    Let’s see, Kohn comes out and says; things are bad, worse than we originally thought. And indicates that more rate cuts are likely. The market absorbs this info, and rallies? WTF? If anything his speech was bearish, and the market is looking for a reason to increase. The Permabulls just don’t know how to deal with the current economic circumstance. Most of them are clueless.

    We saw this yesterday too … Citibank is bailed out by the Arabs, and that is somehow good news? WTF?

    I think the markets are setting up the naive Permabulls right now. Just as they get more confident in the holiday season, wham — out comes the floor. The markets are going to crash … I’m more confident about that than anytime prior. Things are really bad, and progressively getting worse … more cheap money ain’t gonna work this time.

  6. W.Edwards commented on Nov 28

    Housing at worst level in 22 years. Non-durable orders down, way down if you exclude defense spending. Market is convinced that both items guarantee a Fed rate cut at the next meeting so market rallies!

    Given that:

    The market thinks the Fed is behind the curve (not by a little but by a lot!)…

    and it takes 12-18 months for a rate cut of any sort to have any appreciable effect on the economy…

    and all current evidence would suggest that the brakes on the economy are red hot…

    Don’t you think Joe Lemming Wall Streeter would think about this all for a second or two and realize that in the short-term all of the today’s news is actually quite ugly?!

  7. mhm commented on Nov 28

    “Citibank is bailed out by the Arabs, and that is somehow good news?”

    It is not good news, it is a relief. Much better than a bank failure don’t you think? Think of a scenario were Citi fails and all its consequences. Thank the Arabs (despite their agenda)…

  8. Donny commented on Nov 28


    I’m sorry we’re off topic on this thread, but many of us just think this is nuts.

    Foreclosures are at multi-year highs and rising
    Freddie and Fannie are in dire straights
    Countrywide is the big enigma
    The investment banks are writing down assets
    Consumer confidence is declining
    and on, and on, and on …

    But because the Fed is going to provide more poison and the Arabs are bailing out our largest bank, things are looking good … the market is up 550+ points in 2 days. LOL-WTF

  9. Costa commented on Nov 28

    at least they use to do this on some lame good news, now they just do this on bad news.

  10. michael sshumacher commented on Nov 28

    And as oil slowly drifts back we’ll start to see the whole “rent-a-rebel” in Nigeria stories again.

    “strikes in Nigeria”
    “mexico slows production”
    “Turkey to Invade Iraq (like that had a shred of truth to it) how come it’s not a problem now??

    today is what a well placed $26 billion and rate cut comments get you…

    I’d dearly love to short the piss out of this but in many cases shorts are not available and we do have the latest version of bailout the banks coming on Dec 11th.

    WE got that 10 % correction however the bounce off it was certainly well orchestrated…… to within 50 pts of that low and then took off based on bailing out banks and yet more dilutive actions.

    Gotta Love the crap we are eating now…


  11. sn commented on Nov 28

    it seems to me that Barry called this rally a few days ago. suggest patience until the market becomes a “weighing machine”

  12. Estragon commented on Nov 28


    According to Tony Crescenzi at TSCM, $8 billion of fed repos were mortgages (usually treasuries), termed out to Jan 10 (usually shorter). Hmmm, or maybe that should be ho-ho-ho.

    Back on topic though, I’m a bit surprised the NAR is still spewing this bottom talk. Realtor commissions have to be down by ~25% YoY just based on sale volumes and price declines; maybe more as some agents are likely eating commissions to get deals done.

    At this point you’d think the NAR might start talking about vendors still pricing too high relative to new inventory and rental competition. If I was a realtor I’d be throwing big rocks at the NAR for implicitly suggesting vendors hold out for their price.

  13. michael sshumacher commented on Nov 28


    Yes the one amount is the previously announced repo that is termed for 52 days (how’s that for use of your tax dollars to prop up banks in YE)

    But the rest of them, all $18 billion of them, are just another use of cash to throw at the market……it’s not a coincidence that we are up over 600 pts between the time it was announced and the actual delivery of it.

    Anticipation of that new Mercedes for the wife trumps any and all rationalization for why and how……

    As far as the NAR I suspect that the really good agents (a small minority) are quietly cursing these monthly bottom calls as it just paints them (NAR) as so out of touch and actually works against them as each successive bottom call gets lower and lower. At least Hank Paulsen has a place to go work on 1/21/09 as he is eminently qualified to continue to call bottoms……for about 12 months straight.


  14. Stuart commented on Nov 28

    Yun is rapidly demonstrated he is worse than Lareah..and that is saying ALOT. More suited to the baby pool, Lareah drowned and Yun is sucking in water, drowning in the deep end. Complete Morons of zero credibility. The NAR is a bad joke with representatives such as these two clowns. Just goes to prove that official organizations get a pass in terms of critical analysis being applied by the media. Sign of our world these days. If it’s officially recognized it must be true, regardless how tortured the data is or how drawn conclusions are utter fabrications.

  15. Bonghiteric commented on Nov 28

    To quote Dave Atell… “You ever make fun of someone so much you think you should thank them for all the good times you’ve had”…

    I’d like to thank Lawrence and David for a number of good laughs in the last year or so.

  16. Paul Jones commented on Nov 28

    People will continue to build until it is a little bit cheaper to buy a used home then to build it new.

    And God bless them for it.

  17. rex commented on Nov 28

    Does every post on this blog have to include a paranoid rant about the Fed’s repos?

    Attention MS: These ARE NOT your tax dollars used to prop up banks. The Fed doesn’t use tax dollars (that’s for wimps like the Pentagon). It just creates the money it needs out of thin air, lends it out at a rate determined by the auction (4.77% annual interest today) and then gets repaid the next day or the next week or the next month. And then the money goes back into the aether. Poof.
    Notice that the Fed makes money on these operations.

    There’s no need to get all Nostradamus on us every day, OK MS??

  18. Pat Gorup commented on Nov 28

    There’s a really cute cartoon on the FOMC website that shows that when the Fed buys repos it creates new money. The bank the Fed makes the loan to in turn loans that money out to businesses & consumers and the money supply is enlarged. It just doesn’t go “poof” with repayment. While it may not be “tax dollars” paying for it, every time the Fed does this the dollar you hold becomes worth less (inflation). So you are paying for it.

  19. Francois Theberge commented on Nov 28


    Creating money out of thin air is not a tax; it is robbery, since it DESTROYS via inflation, the savings and return on investment of EVERYONE.

    BTW, even paranoid people have real enemies.


  20. Grodge commented on Nov 28

    There may be a job waiting for you at NAR when Lawrence Yun is canned. Shouldn’t be too long a wait.

  21. Greg0658 commented on Nov 29

    Rex – who gets the interest on the FED lending? or what is the US taxpayers cut of the interest?

  22. Josh commented on Nov 29

    If by mixed you mean a combination of terrible and horrible, then I guess its mixed.
    This made me laugh out loud…

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