Thursday, December 28, 2006

Existing Home Sales Increase .6%

From the National Association of Realtors

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 0.6 percent to a seasonally adjusted annual rate of 6.28 million units in November from a level of 6.24 million in October, but were 10.7 percent below the 7.03 million-unit pace in November 2005.

The median price of home sales decreased $1,000 to $218,000 and is down 3.1% YOY.

The average price increased to $1,000 to $265,000 and is down 1.8% YOY.

Inventory dropped to a 7.3 month supply while the YOY increase in inventory is 30.6%.

The big reason for the increase was a 6% jump in the Northeast sales. This is the smallest region sales wise. All other regions were either up slightly (the West was up .8%) unchanged (the Midwest) or down (the South -1.8%).

So -- inventory is still very high and the reason for the increase was a jump in sales in the smallest real estate region in the country.

In other words, this report looks fair but still raises three concerns.

1.) There is still a ton of inventory on the market in a declining YOY sales environment. That means the inventory will be there awhile. So the possibility of a price drop still remains.

2.) Without the NE increase (which I am guessing is partly due to an unseasonably warm winter and is the smallest region in the country by size of sales), this report would have been negative. The next report will indicate how sustainable this increase is but I have some doubts.

3.) The YOY price change is dropping and the median price has dropped each month since July. In other words, prices have no stabilized, although the rate of the median decrease has slowed. So long as prices are dropping and have not stabilized for a few months, calling an absolute bottom in the housing market is probably premature.

Overall, however, this report will give plenty of ammunition to pundits calling the housing market decline over.