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 11/24/08 For Oct 2008 | ||||||||||||
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Highlights
Home prices are now breaking lower in what is certain to further intensify pressures on foreclosures and the banking sector. The median sales price of an existing home fell a very steep 4.2 percent in October to $183,300, a level last seen in first quarter 2004. The year-on-year decrease of 11.9 percent is the worst in 10 years of available data. New home sales data for September showed a similar year-on-year decline. The new home sales report for October will be released Wednesday.
Selling rates in today's report are less alarming. The annual unit sales rate in October did fall to 4.98 million but the rate is above most of the monthly rates this year and is only 1.6 percent below a year ago, a comparison, in a rare positive, that suggests the sector may be bottoming. But supply on the market remains extremely swollen, at 4.23 million units for 10.2 months of supply, up from 10.0 in September.
Distressed sales continue to inflate supply and deflate prices. The report said 45 percent of sales are foreclosure related, this is up from prior months. Stocks rallied on the report which, despite all the negatives, does show stable rates of sales and quiets, for now, concern that buyers, rattled by the drop in prices, are breaking purchase agreements.
Existing home sales jumped 5.5 percent in September to an annual rate of 5.18 million -- the best rate since August last year. The month-on-month percentage jump was the best in more than five years while the year-on-year rate of plus 1.4 percent was the first positive rate in three years. Of course these gains were being made against easy comparisons, in fact against record lows. The bad news in the report was a steep drop in prices. It has taken heavy discounting to boost sales. The median price for the single-family component plunged 5.6 percent in the month of September and down 8.6 percent on a year-ago basis. Continued price declines are certain to raise foreclosures and will weigh on supply. Nonetheless, supply on the market was down in September, coming in at 9.9 months supply versus 10.6 months in August. Looking ahead, the latest pending home sales numbers indicate that the September existing sales numbers may not last. Pending home sales fell back in September, dropping 4.6 percent and reversing some of August's big gain of 7.5 percent.
Existing home sales Consensus Forecast for October 08: 5.00 million-unit rate
Range: 4.50 to 5.22 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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