Sales of existing homes dropped 3.1% from the prior month in October, and slipped 1.6% from the previous year. Total housing inventory fell 0.9%.  percent to 4.23 million existing homes available for sale, which represents a 10.2-month supply at the current sales pace, up from a 10.0-month supply in September. Single-family home sales declined 3.3 percent to a seasonally adjusted annual rate of 4.43 million

Prices fell by the most on record: Median price fell 11.3% ($183,300) from a year earlier. This is the largest year-over-year existing home price decrease since records began in 1968.

Bloomberg noted the price drop is “signaling a deepening housing recession going into 2009,” but I think their interpretation is in error. This is another of those “Looks bad, actually is good” data points. Prices remain elevated, and the sooner they revert back to historic means, the better.

Of course, it wouldn’t be an existing home sales release without some minor idiocy from the crew at the NAR, who wrote:

The national median existing-home price3 for all housing types was $183,300 in October, down 11.3 percent from a year ago when the median was $206,700. There remains a significant downward distortion in the current price from a large number of distress sales at discounted prices; the median is where half of the homes sold for more and half sold for less. (emphasis added)

Funny, I do not seem to recall them warning about upward distortions of prices due to the combination of absurdly easy credit, ultra-low rates, and the appraisal fraud some of their membership helped to promote.

The simple fact is that these “distressed” sales were the unavoidable result of money being lent to people who never should have received it, and these  borrowers then buying homes they could not afford.

The so-called distortion took place years ago, and the current distressed sales are the repair of that distortion.

That the National Association of Realtors refuses to acknowledge this only further reinforces their image as absurd cheerleaders and idiot naifs. They have a significant degree of culpability in the entire housing debacle.

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Existing Home Sales, Non Seasonably Adjusted

Existing Home Inventory, Monthly

chart courtesy of Calculated Risk

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Source:
Existing-Home Sales Soften on Economic Volatility
Realtors, November 24, 2008

http://www.realtor.org/press_room/news_releases/2008/ehs_soften_on_economic_volatility

Category: Credit, Markets, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “Existing Home Sales Record Price Drop”

  1. The tight consumer credit situation and weak income and job prospects for potential homebuyers will constrain home sales for the foreseeable future. Failing a pick-up in these measures, prices will have to fall further to improve affordability and clear surplus inventories.

    http://www.investmentpostcards.com

  2. VennData says:

    On the outside chance P-E Obama names Lawrence Yun to his economic team, I’m loading up on out of the money puts.

  3. Renting in Mass says:

    I’d like to apply some significant downward distortion to the crew at the NAR.

  4. Bruce N Tennessee says:

    Wait just a doggoned minute…I regularly visit the NAR website…you mean to tell me we are having some sort of real estate downturn? Who says?

  5. JohnnyVee says:

    “This is another of those “Looks bad, actually is good” data points. Prices remain elevated, and the sooner they revert back to historic means, the better.”

    As I recall, at the start of the recession in 1929, someone important at the time said let the market go down, let businesses fail, liqidate employment, etc., so the market can adjust and the USA can recover. Your “look on the bright side of life” statement seems similar. Also, any action that would tend to distort markets/prices would be bad and, therefore, all of the bank bailouts. Market distortions is US capitalism.

  6. kwsmith2 says:

    NAR is an industry group and they are selling real estate. Of course they are cheerleaders. I don’t see why its such a big deal.

  7. Winston Munn says:

    It now becomes clear. Obviously, the U.S. was invaded some time in 2006-2007 by a viscious, Grimm downward-distorting price fairy who proceded to downwardly distort prices in not only houses but all manner of assets, including the stock of Bear-Stearns, Lehman Brothers, and Citigroup. The bailouts we are seeing are not really cash bailouts but the use of anti-fairy gold dust to dilute the effects.

    That would explain the Goldilocks economy….

  8. R. Timm says:

    I don’t see anything “absurd” about the NAR cheerleading for higher home prices. Their members typically get paid as a percentage of sales.

  9. Winston Munn says:

    NAR Speak:

    ““Over the past 30 years, the median price of existing homes has increased an average of more than 6 percent every year, and home values nearly double every 10 years, according to historical data from NAR’s existing home-sales series. Thanks to the power of leverage, a homeowner’s return on investment is even more impressive over time. ”

    English Translation: More house + less down = bigger commissions

  10. winslow says:

    I just viewed a documentary about communist China. The party stays in power by making the populace believe in certian ideals. Actual facts do not have to be used. Kind of sounds like NAR.

  11. letgoandrelax says:

    “Funny, I do not seem to recall them warning about upward distortions of prices due to the combination of absurdly easy credit, ultra-low rates, and the appraisal fraud some of their membership helped to promote.”

    Barry, why do you hate america?

    :^)

  12. Pete says:

    Interesting CR article ( http://calculatedrisk.blogspot.com/2008/11/nar-re-default-rate-50-of-modifications.html ) on high default rate of modified mortgages .

  13. Pete says:

    Another interesting CR RE article on home sales turnover .. CR was on a roll 11-24-08 – -http://calculatedrisk.blogspot.com/2008/11/existing-home-sales-turnover-will-slow.html
    .