Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends. (National Association of Realtors) Why Investors Care
| Released on 11/28/07 For Oct 2007 | ||||||||||||
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Highlights
Sales of existing homes are falling to new cyclical lows, down 1.2 percent in October to a 4.97 million annual rate that is the lowest since the current series began in 1999. And the worst news, supply on the market -- at 10.8 months -- is also the highest since the series began. Poor sales are finally beginning to erode year-on-year prices, which are down 5.1 percent to a median $207,800. Falling home prices are likely to crimp consumer spending and are certain to further hurt demand for home-related goods and services. One plus in the data is that weakness was centered in condos not the more closely watched single-family category that showed no change in the month.
The National Association of Realtors which compiles the report blamed October's weakness on the continuing impact of the credit crunch and on high rates for jumbo loans which are not backed by government guarantees. Regionally sales were softest in the West and Midwest. Financial markets showed little initial reaction to the data with stocks extending gains and Treasury prices actually slipping. But a repeat of today's disappointment in tomorrow's report on new homes sales could very well raise concerns over housing to a new pitch.
Existing home sales fell 8.0 percent in September to a 5.040 million annual rate which was down 19.1 percent on a year-on-year basis. Housing is still in recession as supply remains very bloated at 10.5 months in September, the highest level since 1999. And supply is weighing on prices, which fell 5.7 percent for the month. Both existing and new home sales along with their supply numbers are probably the best indicators for when housing is coming out of recession. There are some indicators further "upstream" - such as pending home sales - but they are more volatile and difficult to interpret.
Existing home sales Consensus Forecast for October 07: 4.950 million-unit rate
Range: 4.890 to 5.040 million-unit rate
![[Chart]](chart.gif)
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Existing home sales reached a peak in mid-2005 and have been easing since. Typically, a distinct reverse relationship exists between home sales and mortgage rates. |
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