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 9/24/08 For Aug 2008 | ||||||||||||
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Highlights
The descent of the housing sector may be slowing, at least in August before September's crunch hit. Existing home sales did fall 2.2 percent in August to a 4.910 million unit rate, but a rate still in line with this year's trend. Condo sales, at -8.2 percent, showed an unusually steep drop in the month with single-family sales down a less alarming but still sizable -1.4 percent. Differences in regions were narrow with the Northeast and West showing mid single digit percentage declines and the Midwest and South both showing fractional gains.
The year-on-year rate, helped by ever easier comparisons, is less frightening, at -10.7 percent in August for the least severe dip since July last year. Existing home sales began their uninterrupted run of year-on-year decreases in December 2005 -- a numbing, nearly three-year stretch that has ended up gutting the financial markets.
The year-on-year decline of 9.5 percent is the most severe yet for the median price, now at $203,100. The month-on-month drop, at 3.4 percent, is the steepest of the year. Prices are being pressed down by a tide of distressed properties, sales of which the report said make up 35 to 40 percent of total sales. Prices have been in nearly uninterrupted decline for two years, hit by swelling supply which is at 10.4 months. But supply, at 4.255 million units, has at least been edging back the last couple of months.
This report is mixed at the very best, with slowing rates of decline in sales offset by rising rates of decline in sale prices, the latter factor one that is certain to add further pressure to the credit markets. Markets, focused on bail-out talks in Washington, showed no reaction to the report.
Existing home sales rose 3.1 percent to a 5.0 million annual rate in July. But the rise did not make a dent in supply on the market, which was still severely bloated at 11.2 months and up from 11.1 months in June and 10.8 months in May. Unsold inventories continued to weigh on prices which fell 1.3 percent in the month to a median $212.4 million for a 7.1 percent year-on-year decline. There are mixed signals on whether sales will pick up further in August. The latest pending home sales index fell 3.2 percent in July while the Mortgage Bankers Association's purchase applications index was little changed over the month of August.
Existing home sales Consensus Forecast for August 08: 4.92 million-unit rate
Range: 4.80 to 5.15 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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