Chart courtesy of Calculated Risk

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Above you will find our favorite housing chart — Existing Home Sales, but raw non seasonally-adjusted data. As you can see, the August 2011 is an improvement from 2010, but about onm par with ’08 and ’09.

Here is the usual NAR happy talk:

“Existing-home sales increased in August, even with ongoing tight credit and appraisal problems, along with regional disruptions created by Hurricane Irene, according to the National Association of Realtors. Monthly gains were seen in all regions.

Hurricane Irene? Really? Let’s skip the babbling nonsense, and go to the data:

• Total existing-home sales rose 7.7% in August; That is a seasonally adjusted annual rate of 5.03 million sales
• Year over year, that reflects an 18.6% increase than the 4.24 million vs August 2010.
• National median existing-home price was $168,300 — a fall of 5.1% versus August 2010
• First-time buyers were about 32% of EHS
• Investors are 22% of purchase activity vs 18% in July and 21% in August 2010.
• All-cash sales were 29% of transactions in August, similar to last month and August 2010;
• Distressed homes were 31% of all sales, vs  29% in July and 34% in August 2010.
• Contract failures were 18% in August.
• Total housing inventory fell 3.0% to 3.58 million existing homes available for sale (8.5-month supply)

My best guess is we are about halfway through the process of working off the housing excesses.

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Source:
August Existing-Home Sales Rise Despite Headwinds, Up Strongly from a Year Ago
National Association of Realtors, September 21, 2011

http://www.realtor.org/press_room/news_releases/2011/09/ehs_aug

Category: Data Analysis, 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.

15 Responses to “August Existing Home Prices Fall, Sales Rise”

  1. flocktard says:

    This is actually not a bad report. Mortgage rates are practically at the level of Islamic financing, so it shouldn’t be that much of a surprise. Nice to see that first time homebuyer figure that high.

    The only thing that is a bit distortive in these numbers is the pricing. Sales in toxic, high foreclosure areas like Nevada, California and Arizona will drag the averages down. I would like to see how pricing is holding up in areas that weren’t blown out by New Century and American Home Mortgage, or in areas of massive overbuilding like Florida.

  2. Molesworth says:

    Me • Investors are 22% of purchase activity vs 18% in July and 21% in August 2010.
    Me • All-cash sales were 29% of transactions in August, similar to last month and August 2010;
    Me • Distressed homes were 31% of all sales, vs 29% in July and 34% in August 2010.
    Not me yet but we’ve got one teetering • Contract failures were 18% in August.
    We reckon we’ve got 18-24 months until the area where we buy is cleared out.
    But as I mentioned in an earlier post, the banks are hanging onto inventory.

    Thanks to DeDude and, once again, to Petey for helping to clarify.
    We’re buying with cash and the houses are nearly always occupied. We work with occupants to get them out without trashing the place.

  3. Chief Tomahawk says:

    “My best guess is we are about halfway through the process of working off the housing excesses.”

    And this is year 5 of the bust … Does that forecast to a bottom in 2016? That is if anyone under 30 or over 50 has a job by then and QE 117 doesn’t take down the economy.

  4. Expat says:

    National median existing-home price was $168,300 . Median household income in the US is about $49,500. That gives us a Price/Income ratio of 3.4 which is still above the long-term ratio and far, far above what should be expected under the present conditions.

    Given our housing overhang, the shadow inventory, high unemployment, high underemployment, the insolvency of most of the banking system, and the reversion to traditional lending standards, I still expect the price/income ratio to head to around 2.75. That implies (and assuming incomes even stay stable which looks unlikely…they are heading down still) a median price of $136000, implying a drop of another %20.

    Some markets might already be back to their long-term level (but have not shot past, something which is required to balance the equation and is justified by what I listed above), but many markets have not started their plunge (NY comes to mind).

  5. super_trooper says:

    Why is this a good plot to estimate that “we are about halfway through the process of working off the housing excesses.”
    Isn’t the longitudional “housing starts” plots better to use for that purpose?

    http://cr4re.com/charts/charts.html?Housing#category=Housing&chart=HousingStartsLongAug2011.jpg

  6. Concerned Neighbour says:

    Rule #1 in economic PR:
    “Blame the weather”

    Rule #2 in economic PR:
    “Revise data downward after the initial release”

  7. DebbieSmith says:

    Here’s who the Federal Reserve is blaming for the current housing crisis:

    http://viableopposition.blogspot.com/2011/07/who-is-to-blame-for-americas.html

    Hint – the Fed doesn’t blame American bank’s aggressive lending practices prior to the Great Recession for creating the problem.

  8. ashpelham2 says:

    As with all of these real estate statistics, your mileage may vary depending on LOCATION, LOCATION, LOCATION. It is interesting for me to see two houses on my block of cookie cutters, continue to rent time and time again, because they can’t sell. One house at the other end sold for 15% less than the house next to it sold a year earlier. Across the street, the single mom is trying to sell for 20% more than the one that just sold, and actually is having regular showings…..

    It’s a mixed bag.

  9. DeDude says:

    @Expat;

    Price/Income is not a real good metric for affordability. You have to take into account that what really determine if people can afford a house is the monthly payment. It is probably better to look at monthly payment (on a loan for median priced house) to median income. As long as rates stay where they are we are probably not that far from long term averages. I agree we could go further down if unemployment does not improve or if more inventory is pushed onto the market, but I would be surprised to se more than a 10% move in prices over the next year.

  10. Orange14 says:

    I can tell you that something is happening. My daughter finally heard from the bank on the condo short sale that she put an offer in over THREE months ago that they had accepted the offer (the current owners had accepted the offer the week it was put in). At least one underwater property will be coming off the market!

    @ ashpelham2 – houses in our neighborhood (suburban DC) sell within a week of going on the market at full price. You are correct about location.

  11. Greg0658 says:

    you are correct about location – SugarTown Rules

  12. Expat says:

    @ DeDude: I concur, but interest rates are abnormally low. All the other factors are driving prices down despite the low rates. Rates will rise. No, not tomorrow, but in two to three years. And when they do, we still won’t have come out of the downward cycle caused by employment, inventories, and stricter lending standards. So the cycle will continue.

    If affordability (monthly payments) alone determined house prices, we would logically be back over the 2006-7 peaks. Houses are long term purchases, long term consumer items. The median price/income ratio measures affordability over long periods and takes into account interest rates as well as the other factors. Isolating monthly payments has led quite a few buyers back into the market prematurely. While they may be happy if they have locked in their rates and don’t intend to sell for fifteen to twenty years, the average home buyer will likely sell at a lower price in five to seven years (seven being the average time a buyer “owns” a house”).

    In any case, I don’t expect 20% in one year, but I do expect a 20% drop before we hit some sort of bottom.

  13. Jost says:

    It is not about housing access, it is about the ability to afford that housing on the basis of earned income.

  14. drewburn says:

    I committed to stimulus this year. Paid off my house in the spring and bought an even nicer second home for retirement in a year or two in a N. Michigan resort community. That house listed in ’08 for $599k, wife and I paid $385k, 4 1/4% 30 year, closed last week. Hope it works out, but I don’t feel too bad about it. Nice view of Lake Michigan…..ah….

  15. good for you drewburn …. good for you.