Existing Home Sales Down in October

Existing Home Sales Down in October

Existing Home Sales Down in October

This morning the National Association of Realtors released their Existing Home Sales report. Sales decreased by 2.2 percent to a seasonally adjusted annual rate of 4.43 million homes sold, down from September's pace of 4.53 million homes sold. The numbers were slightly worse than expectations of4.49 million homes sold.

According to the report, total housing inventory is down 3.4 percent to 3.86 million homes for sale. This is a 10.5 month supply at the current pace (as compared to 6 months or so in a normal market). Arguably, the overwhelming supply is the largest hurdle facing a housing recovery.

Said Lawrence Yun, President of the NAR:

"The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales. Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels. Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year."

Numbers released by CoreLogic yesterday suggested that there are 4.2 million homes for sale (in what they termed "visible inventory"). I'm sure their methodology is somewhat different from the NAR's, which likely accounts for the difference. No matter which number you like, there are a whole lot of homes for sale, and not a lot of purchase demand, despite mortgage rates that are close to historical lows. Whether the lack of demand is due to the poor economy, the first time homebuyer tax credit, or buyer skittishness about the market and declining prices (and it is likely a combination of the three), is somewhat irrelevant. The lack of demand and glut of supply almost assures continued home price declines going into the new year.

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