Everyone knew that Existing Home Sales were going to stink the joint up today — but I just had to laugh when I read the NAR commentary; The headline along was priceless: July Existing-Home Sales Fall as Expected but Prices Rise. Too bad they don’t cover other events: “Lincoln attends theater opening; leaves early with headache.”

They are the world’s most awesome/awful cheerleaders on the planet.

Bloomberg notes: “Foreclosures and short-sales are boosting the so-called shadow inventory, and competing with owners trying to sell properties. Home seizures increased almost 4 percent in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, RealtyTrac Inc. said Aug. 12.”

The housing data itself contains some worthwhile data points:

• National median existing-home price was $182,600 in July 2010 — 0.7% higher than June 2009.

• Distressed homes were 32% of sales, vs.  31% in July 2009.

• First-time buyers purchased 38% of all homes, down from 43% in June, according to an NAR survey. The decrease in the purchase of starter homes helps to explain the price rise.

• All-cash sales were at 30%, up from 24% in June.

• Total housing inventory rose 2.5% to 3.98 million homes — an 12.5 month supply at the current sales pace, up from 8.9 months in May.

• Unsold inventory remains 12.9% below the record of 4.58 million in July 2008.

• Existing-home sales in the Northeast dropped 29.5% (30.3% down from July 2009):  They were down 35% in the Midwest (off 33.3% from July 2009);  They fell 22.6% in the South (19.8% lower than July 2009); and were down 25% in the West (off 23% from July 2009).

Note that July home sales still have some tax credit closings, so the data is not perfect.

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click for ginormous graphic>

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UPDATE: An error was made in transcribing some of the data from the NAR release; it has been corrected; the bullet points above reflect the updated data. Our apologies for the error.

>

Source:
Existing-Home Sales Slow in June but Remain Above Year-Ago Levels
National Association of Realtors, July 22, 2010
http://www.realtor.org/press_room/news_releases/2010/07/ehs_june

July Existing-Home Sales Fall as Expected but Prices Rise
National Association of Realtors, August 24, 2010
http://www.realtor.org/press_room/news_releases/2010/08/ehs_fall

Category: Real Estate, Really, really bad calls

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.

55 Responses to “Exisiting Home Sales Plummet 27.2%”

  1. Mannwich says:

    The number that really jumps out – 12.5 months of supply. Yikes. WTE?

  2. Mannwich says:

    From CR:

    Months of supply increased to 12.5 months in July from 8.9 months in June. A normal market has under 6 months of supply, so this is extremely high and suggests prices, as measured by the repeat sales indexes like Case-Shiller and CoreLogic, will start declining.

    ~~~

    BR: Oops, that got truncated somehow in the cut & paste process

    I will fix above

  3. THE PARROT IS STILL DEAD!

    I know I keep saying that but the skit is so fitting that is is now a compulsion to post it on every housing thread

  4. NoKidding says:

    Look out below!

    There are an aweful lot of important indicators pointing down right now.

    Nobody knows the future, but come on. The only reason we can’t see any fire is the smoke is too thick.

  5. Its Me says:

    In the article

    “The supply of homes on the market is higher than we’d like to see. But home prices are still holding their ground because prices had already overcorrected in many local markets,” Yun said.”

    Some how I would not equate an over supply of houses with an over corrected price decrease. Perhaps the very group / trade association is artificially holding prices too high and preventing a new supply-price equilibrium lower down on the price chart.

  6. kstills says:

    One assumes that the author is going to call for even more stimulus now?

    Double the last amount? Triple?

    One thing that should be becoming clear, is that any notion of Keynesian stimulus is an illusion. It only works until you’re crushed by the debt, which is where we are now.

  7. kstills says:

    It’sme,

    I think it was Zillow who published a survey where they asked recent home buyers how much they thought their home would be worth in a years time. The average was 10% appreciation.

    That’s why home prices haven’t fallen to a level where inventory will clear, because there are still too many morons buying homes.

    ~~~

    BR: It was Shiller; More here

  8. wally says:

    This is going to get really, really ugly by election day.

  9. realgm says:

    Housing market can be extremely different from one city to another. I recalled BR posted a topic that included graphics regarding people moving in / out of cities. Seattle was one of the more popular places to move to. I wonder how’s the housing figures there.

  10. rootless cosmopolitan says:

    Barry,

    I’m a bit confused. Are you talking about the June or July home sales? They just have released the July data, but, in parts, you talk about June and seem to have mixed in some data from June. You also refer to the NAR headline from June, but not the one from July.

    ~~~

    BR: Doh! I pulled the wrong file

    i suck — i’ll fix that right away

  11. ashpelham2 says:

    I recall that post as well, realgm. Los Angeles was a net-outflow place, yet talking to people who live there (I’m starting to break into the entertainment business somehow), it seems that traffic is worse than ever.

    This country is just going through a generational change that will make it poorer, not wealthier. Sad to be a part of it, sometimes.

  12. Mannwich says:

    @realgm: I would add it’s different from neighborhood to neighborhood, but the overall trend is down.

  13. BR,

    along the lines of HTCMSI’s Post, above, that “Huxley v. Orwell”-Post, of recent, might could be ‘Source-linked’ in this, and future, “Housing”-Post(s)..
    ~~

    btw, does that “12.5 Months” include the ‘Shadow Inventory’ (that the FDIC is allowing ‘Banks’ to carry on/off their ‘Books’) ?

  14. Chief Tomahawk says:

    What explains this?!

    “Existing-home sales in the Northeast rose 7.9%”, whereas the rest of the country went into the crapper???

    ~~~

    BR: What explains that is an error in pulling the release from the NAR; That is June’s data

  15. ZedLoch says:

    @kstills
    re: stimulus
    actually, it might be a good idea for the gov. to start buying houses and burning them. with fire. it’ll take care of that 12 month oversupply issue real fast.

  16. JY says:

    Fire that intern!

  17. Mannwich says:

    @Chief: Bailouts for Wall Street?

  18. gordongekko00 says:

    So much attention on real estate but nothing about the elephant in the room, namely the stock market seems to be on the verge of a major meltdown. Classic. Fade Wall Street.

  19. Thor says:

    ashpelham2 -

    I live here and traffic is as bad as ever. Vacancies are up, but there’s definitely no huge exodus of people here.

    Careful with the “exodus” articles. I keep seeing people talk about how California is now losing people. We are losing more people to other states than are moving here from other states, but our birth rate is higher, as is international immigration (both legal and illegal) and that is keeping the overall population of the state from dropping.

  20. X on the MTA says:

    Tom Lawler beats the consensus… again. and again. and again. Must be all that research he *actually* does. whoddathunkit??

  21. Chief Tomahawk says:

    Mannwich, that or bonus money being put to use. Still is weird though. Did Manhattan take off and the other burroughs pass out? What’s going on with Boston? Or maybe the Quakers are trying to buy back PA one property at a time???

  22. Chief Tomahawk says:

    Tom Lawler, or Tom Lawler’s friends are making a killing if they act on his calls…

  23. rootless cosmopolitan says:

    @Chief Tomahawk:

    What explains this?!

    “Existing-home sales in the Northeast rose 7.9%”, whereas the rest of the country went into the crapper???

    These are the data from June. For July, the press NAR press release says:

    “Regionally, existing-home sales in the Northeast dropped 29.5 percent to an annual pace of 620,000 in July and are 30.3 percent lower than a year ago. The median price in the Northeast was $263,800, up 4.8 percent from July 2009.”

    I suspect when Barry went to the NAR website, the press release with the data from June was still there, instead the one with the July-data; and Barry accidentally took the June data and referred to the June headline for his post not noticing. Therefore the confusion about the data here.

  24. Mannwich says:

    @Chief: A lot of old money in Boston and a decent financial services presence. More diversified business base all around there too.

  25. Mannwich says:

    @Chief: And that bonus money wouldn’t exist without the Wall Street bailouts, so that’s still related to the bailouts.

  26. donna says:

    Well, we were going to buy a car, but then the reality of our kids’ tuition payments hit us.

    How in the world does anyone afford to buy a house these days?

  27. donna says:

    As for a market meltdown, well, yeah, we’re going to have to sell the stocks to pay for school, too.

    The elephant in the room is educating the kids and finding them jobs. We need an education and jobs program in this country STAT.

  28. rootless cosmopolitan says:

    donna,

    Some people just have enough money. They can afford it. Even if prices are still highly inflated like in the New York City market. And in other markets, where the bubble has already deflated, prices have come down so much that buying a house or apartment has become affordable for medium income households again, as long as one has a relatively safe job and one isn’t sitting on a mountain of debt already.

  29. ashpelham2 says:

    Thor, thanks for the further insight on population demos in California. It’s a place that I’d love to live in, as would many people. Still, there is a lot of fear of the unknown for many of us in different place.

    Take me, for example. COming from Alabama…..

  30. louis says:

    Will it make the ostrich come up for air?

  31. Chief Tomahawk says:

    Thank you BR, rootless cosmo for the clarification.

    Mannwich, evidently with the correct info Cosmo posted above, the bailout cash has been spent. -29%, -30.3% are some horrific numbers.

    Also, the folks who are saying only 20% further down from here in housing prices, well short of Bernanke destroying the dollar beyond recognition (i.e. gold becomes our new currency), I think 20% down will merely be a mileage marker along the journey (50% further down?) Too many folks don’t have savings, have too much debt, and will become credit ineligible for 7 years through bankruptcy, etc. That spells a struggling job market to say the least, which doesn’t bode well for housing.

  32. Chief Tomahawk says:

    Would someone please check Dr. Yun’s medical credentials …

    http://www.cnbc.com/id/15840232?video=1573635299&play=1

    At a minute and 30 seconds, CNBC covered it, but sure didn’t dwell on it… drive-by ‘bad news coverage’ distracts drivers and causes accidents…

  33. bonghiteric says:

    Here in suburban Philly I’ve been actively looking for a home for going on three months. As we’re committed to staying in my daughter’s school district our choices are limited to mostly developments. We’ve had little success. What we are finding is that many homeowners used their home equity lines of credit to upgrade their homes. When combined with what they still owe on the mortgage, (often ARM’s)that when we put in an offer inline with comps it is significantly below their list price. If the owners don’t recoup a certain amount from the sale (hence, the inflated list price) the sale effectively becomes a short sale because they have to come to the table with cash to make up the difference with their bank. I hadn’t anticipated this phenomenon hindering our purchase because I haven’t read anything about it but it will definitely factor in to increasing inventory (albeit, marginally). We’ve had one seller not even counter and pull his house off the market. We are expecting the same from the owners of a property on which we expect to make an offer.

    p.s – every home we’ve looked at since late June is still on the market and several have undergone price reductions and this is in Chester County which, according to my R.E. agent is a formidable foe to the housing malaise.

  34. call me ahab says:

    BR- I responded to your comment to my post on the other thread-

    long story short- why would I take the other side of your trade when I was 100% agreement w/ your call?

    just wondering

  35. UPDATE: An error was made in transcribing some of the data from the NAR release; it has been corrected; the bullet points above reflect the updated data. Our apologies for the error.
    ~~

    ~”Mistakes do not become Errors, unless We choose not to rectify them..”

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=JFK+Quote+Mistakes+do+not+become+Errors
    ~~

    to be Left-handed..

  36. super_trooper says:

    BR, why not predict next month’s release statement from NAR?

  37. actually, it might be a good idea for the gov. to start buying houses and burning them. with fire. it’ll take care of that 12 month oversupply issue real fast.

    ==========================================

    Yes, but that would be an incredible waste of a resource. With all the renters out there they should be given the house instead of burning it. That wouldn’t be fair to homeowners who already worked for theirs of course but I was thinking, maybe they should set up some sort of home lottery. You could have people buying lottery tickets and the reward would be one of these foreclosed homes

    The money from the lottery would go to offset the cost of the foreclosure. How many people would pay $1 for the chance at a home where they couldn’t afford the cost of one.

  38. AHodge says:

    HTCMSI is right
    do it the chinese way.
    Promote building millions of condos for millionaires.
    default on the building loans-many to foreigners
    let modest people buy them at market clearing price.
    no shortage of modest people in china, or here for that matter.

    if you let homes sit vacant– esp where it is warm where most foreclosures are– they are wrecked by mold etc in 6 months.

  39. AHodge says:

    after 6 mo or a year you might as well burn many of them down, probably cheaper than demo.

  40. Survey: Gulf Disaster Spilling Over to Home Values
    US Banker | August, 2010

    By Glen Fest

    Real estate agents in several Gulf Coast-area communities say the BP Deepwater Horizon oil spill has harmed sales and market values – and may continue to hamper activity in the coming months.

    A survey from the real estate asset-valuation firm Clear Capital found that nearly 24 percent of respondents reported a negative impact from the spill, as investors and home-buyers abandoned Gulf-Coast housing markets in droves in the aftermath of the April 20 offshore well explosion. Sales plunged more than 30 percent in some areas, as the oil leak reached coastland in all five states bordering the Gulf of Mexico. More than half of the agents polled reported home values declining 5 percent to 15 percent since the explosion.

    Even in Gulf Coast cities that saw no physical damage from the spill, sales and values were down, according to Clear Capital, and more than 40 percent of real estate professionals remain skittish on long-term mortgage demand because of employment losses in industries like fishing, energy and tourism. “The results of our survey reflect the overall uncertainty of where and by how much the oil spill is affecting individual local markets,” said Alex Villacorta, a senior statistician with Clear Capital.

    Among the hardest-hit housing markets was Panama City, Fla., where year-over-year home sales plunged 32.5 percent in June. Mobile, Ala., 180 miles to the west, saw a 25 percent drop, according to Clear Capital’s report. The firms says agents were able to isolate the sales declines to the spill, rather than foreclosure activity or credit conditions, because of recent trends in stabilization: Panama City, for example, showed a 10.7-percent annual improvement in housing prices as late as April.
    ~~
    as a bonus, One for Kotok’s evolving “Oilslickonomics”-~Thesis..

  41. James HPCP says:

    As the Baby Boomers continue to decline in numbers, the Supply of homes will increase, and Demand will decrease. This is going to be a long slow process and we must let the market clear itself.

  42. Mike in Nola says:

    Manny et al:

    whether or not house prices are declining in Boston, hotel rack rates haven’t gotten any better since 2008. We went in the fall of 2008 just after Hurricane Ike and a storm went up the east coast and rained out a few of our days so we want to go back. I assumed with the hit to the financial sector that prices would be better, but the list prices are just as bad. Maybe it’s like the homeowners that won’t sell and they are marketing the rooms through the discount travel sites when the rooms don’t rent.

    I’m gonna try Priceline; some people on http://www.biddingfortravel.com are getting pretty decent deals (Residence Inn Copley Sq. for $85/night), although it’s tricky to pick the right zone and rating.

  43. Mike in Nola says:

    As to the price changes, or lack thereof, a column from the real estate lady at CNBC (hope that is not an insult. Have heard that the term “lady” may mean something diff in the Northeast than in the South.

    http://www.cnbc.com/id/38833986

    I’ve have been favorably impressed by her columns. They are usually pretty realistic.

  44. Mannwich says:

    @Mike: Ms. Olick is one of the few remaining reality-based reporters on CNBC, which means she’s probably not long for the job.

  45. PDS says:

    the NAR is not alone in their cheerleading…..just watch your re-newed friends at CNBC for half an hour

  46. RW says:

    Last night I would have said that taking the under on Tom Lawler’s existing home sales projection (3.95 million SAAR) was extreme; today I have a few more grey hairs. Mama mia.

    How’d you do on those vix calls Chief?

    At least my long bond positions continue to pay off: Every time somebody makes an “inflation is coming” or a “deficits will cause interest rates to rise” call I make more money. Any day now I’m sure I’ll regret those positions but I’ve been hearing that for several years and the dough just keeps rolling in so …

  47. Chief Tomahawk says:

    RW: At their best this morning, they were 30% up from where I bought them yesterday. Decided to hold onto them through the looming Q2 GDP revision.

    Yes, if you’re long bonds, you’re doing very well!

  48. TakBak04 says:

    I Said it Before…And…I will Say it Again:

    TakBak04 Says:,August 24th, 2010 at 7:33 pm,,Are we just “Kicking the Can Down the Road” with Shilling and Lefrak’s Proposal?

    What about American kids who have Debt from Higher Education Loans they were Suckered into to induce them into High Paying Jobs? What about Them? Are they supposed to defer to Immigrants coming from countries that have “socialized medical care” and “other entitlements” but we entice them to America for Cheap High End Housing? Does the cheap “High End Housing” make them feel good for paying increased costs for Medical Care and the higher US Taxes so they can buy a Condo in NYC or a property in Arizona, Florida or Nevada where there is swimming pool and social acceptance if you open a restaurant or have time to do some entreprenuer stuff with your money? Angel Investing?

    ——
    Immigrants Can Help Fix the Housing Bubbley RICHARD S. LEFRAK and A. GARY SHILLING

    The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country. This makes more sense than the president’s $275 billion housing bailout plan, which Americans greeted with a Bronx cheer.,,The federal bailout forces taxpayers to subsidize overextended homeowners who bet on ever-rising house prices and used their abodes as ATMs, and it doesn’t get to the basic problem — the huge inventory of excess houses. We estimate that 2.4 million houses over and above normal working inventories are left over from the 1996-2005 housing bubble. That’s a lot, considering the long-term average annual construction of 1.5 million single- and multi-family units.,,Excess inventory is the mortal enemy of house prices, which have already fallen 27% since the peak in early 2006. We predict another 14% drop through the end of 2010 if nothing is done to eliminate the surplus.,Chad Crowe,,Doing nothing to eliminate the excess inventory might well push the recession through 2010 and into a depression. Declining home values, for example, are eliminating the home equity that has funded oversized consumer spending for years.,,-Snip-,,There is a high correlation between education and incomes, and in today’s uncertain economic climate, many wealthy foreigners desire U.S. resident status just as a number in Hong Kong secured residences in Singapore and Canada before the British handover to China in 1997. They rapidly became over a quarter of Vancouver’s population, and brought in billions of dollars to buy houses and make other investments.,,We could benefit from such an influx. Merrill Lynch estimates that in 2007 there were 10.1 million individuals in the world, 7.1 million outside the U.S., with at least $1 million in financial assets that totaled $29 trillion. If new immigrants bought the 2.4 million excess houses at today’s $184,000 median price with funds from abroad, they would bring untold billions. The immigrants would also buy consumer goods, pay taxes, and start many new businesses.,,-Snip-,America’s relatively open immigration policy makes this country better off than many other developed lands whose governments also must fund the pensions and health care for growing numbers of retirees. Yet there’s still a huge need for more productive and skilled people, both current residents and immigrants, who will produce enough goods and services to provide for their own needs and for those in retirement. Otherwise, entitlement spending eventually will touch off intergenerational warfare.

    More of Shilling and LeFrack’s Article at:,,http://online.wsj.com/article at: /NA_WSJ_PUB:SB123725421857750565.html#printMode,,———,,
    ————-
    What comes to mind…is this article from the WSJ…with links to other article which is worth the read.

    ——————

    Do the Rich Need the Rest of America?

    ,,Late last year, the U.S. economy experienced a surprising decoupling.,,As stocks boomed, the wealthy bounced back. And while the Main Street economy was wracked by high unemployment and the real-estate crash, the wealthy–whose financial fates were more tied to capital markets than jobs and houses– picked themselves up, brushed themselves off and started buying luxury goods again.Associated Press,,

    Who knows what the next few months and years will bring. But one thing seems clear: the economic fate of Richistan seems increasingly separate from the fate of the U.S.,,Some argue that the decoupling has gone even further. Michael Lind, a policy director for the Economic Growth Program at the New American Foundation, argues in Salon that the American rich no longer need the rest of America.,,He says the wealthy increasingly earn their fortunes with overseas labor, selling to overseas consumers and managing financial transactions that have little to do with the rest of the U.S. “A member of the elite can make money from factories in China that sell to consumers in India, while relying entirely or almost entirely on immigrant servants at one of several homes around the country.”

    He adds:,,“If the American rich increasingly do not depend for their wealth on American workers and American consumers or for their safety on American soldiers or police officers, then it is hardly surprising that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people.

    More at:
    http://blogs.wsj.com/wealth/2010/08/02/do-the-rich-even-need-the-rest-of-america-anymore/tab/print/

  49. philipat says:

    Interesting also that July is the first month this year that monthly sales fallen fallen YOY.

    Larry didn’t mention that.

  50. philipat says:

    @TakBak04

    As in this fascinating Article (Are the American people obsolete?) that BR linked a while back?

    http://www.salon.com/news/feature/2010/07/27/american_people_obsolete

  51. philipat says:

    “Purchases will be “soft for at least two more months as the housing market works through the effects of the end of the tax credit,” Lawrence Yun, the group’s chief economist, told reporters at a press conference. ”

    AT least two more months? I think he meant YEARS, but of course he wasn’t referring to the two years plus of excess inventory in cluding the “Shadow” inventory.

  52. TakBak04 says:

    Reply to: philipat Says:
    August 24th, 2010 at 8:52 pm

    @TakBak04

    As in this fascinating Article (Are the American people obsolete?) that BR linked a while back?

    http://www.salon.com/news/feature/2010/07/27/american_people_obsolete

    ——

    lol’s… A Quirky thing.. “Americans Emigrate for better life” …..while those who are left in America open doors to “high end” Immigrants to solve our Oversupply of Housing!”

    Is this a “Farce/Comedy” that we are living in these days?

    Yes..link to his previous article is fascinating in how it relates…..

  53. TakBak04 says:

    REPLY To: How the Common Man Sees It Says:
    August 24th, 2010 at 3:04 pm

    actually, it might be a good idea for the gov. to start buying houses and burning them. with fire. it’ll take care of that 12 month oversupply issue real fast.

    ———

    Sheesh…I know you are joking…but there was a time in America..when “Arsonists” were really doing this…back to when “Gangsters” were “Gangsters.” Even in jest…that would NOT be a good thing.

    However, bulldozing some of the newer failing developments might be a solution. Let’s return some land in FLA and CA and some other spots in USA who Dotted Houses and Black topped for Parking Lots for Shopping malls…… BACK TO THE LAND! Our food supply has suffered in the “Sand Lands” who used to give us our best tomatoes and other crops. We now have to rely on othe “Sand Lands” in other countries to get a good part of our food. Check out the Oraganic marked food in “Whole Foods” and see where it’s grown. Marked “CHINA/MEXICO/GUATAMALA” ….and tell me if you trust it? Check out the labels on the “frozen veggies” in your local supermarket and look for the “stamp on back of package” for “country of origin.” In most cases….it ain’t USA!

  54. philipat says:

    More of a farce than a comedy really.

    Let me know when you’re coming and I’ll have a cold beer waiting. I might have buyers for your house!!

  55. [...] here if I didn’t link to some very, very smart people with more good info on this report:  The Big Picture, Altos Research and Calculated Risk.  You can also find the original NAR release here.  And [...]