Home sales bounce but off lower levels

Nov Existing Home Sales totaled 4.42mm annualized, well below expectations of 5.05mm but due to major revisions to the last few years, its unlikely that today’s estimate was based on the new methodology. Figures since 2007 were revised sharply lower as expected as a “divergence developed over time between sales reported by MLSs and sales determined by a US census benchmark.” Oct sales in particular were revised to 4.25mm from 4.97mm. Nov sales, after the revisions, are the best since Jan but well below the above 5mm pace in some months in 2011 that was originally reported. In fact, the only month that saw sales above 5mm homes after the bust was in Nov ’09 as people took advantage of the expiring home buying tax credit. The NAR said there were no changes to home prices or month’s supply. Month’s supply fell to 7 from 7.7 in Oct and the lowest since Nov ’09. The median home price at $164,200 is a touch below the average ytd. Distressed sales accounted for 29% of total sales vs 28% in Oct and 33% in Nov ’10 and 1st time buyers totaled 35% vs 34% in Oct and 32% in Nov ’10. Bottom line, notwithstanding the sharp downward revisions in the calculation of the amount of existing homes sold since 2007, the pace of sales is trying to scratch out a bottom and inventory levels are getting close to longer term averages. Also, while home prices are not done going down, most of the declines seen over the past few years are probably in. With this all said, it will still be many years before we’ll see a sustained improvement in both prices and the level of sales. Remember, land prices in Tokyo fell for 17 straight years. They have lost population over this time we know while the US continues to build households but my point is that downward cycles post credit bubble do last many years.

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