Existing Home Sales Rebound

The National Association of Realtors reported that sales of existing homes rebounded 6.5 percent in December and that home prices continued to plunge.
The large number of foreclosures continue to pressure prices, chief economist Lawrence Yun noting that this is probably the largest price decline since the Great Depression.

The national median existing-home price for all housing types was $175,400 in December, which is 15.3 percent below December 2007 when the median was $207,000. There remains a significant downward distortion in the current median from a large number of distress sales at discounted prices, currently 45 percent of transactions; the median is where half of the homes sold for more and half sold for less. For all of 2008, the median price was $198,600, down 9.3 percent from $219,000 in 2007.

The odds are that the distortion is likely to persist for some time...

Comments

[SoCalsurfbum:]

Tim,

I just want to note that the Seasonally Adjusted Annual Rate is a distorted and misleading metric... and it is used because the NAR can issue a press release every other month calling a bottom in housing market by showing "improving" sales, even when sales go down.

The real number is in their press release... home sales went down 3.5% in December vs last year using the real accurate way to adjust for seasonality... YoY.

So the picture is actually bleaker... falling prices and unit volume is still dropping.

By the way... if they were really attempting to be consistent, they would seasonally adjust the Inventory number as well since housing inventory fluctuates seasonally just like home sales.

Jan 26 03:13 PM

[Tony Petroski:]

I agree the seasonally-adjusted number is misleading. Nobody in Minnesota buys a house in December. On the other hand, activity picks up in a big way in the March-June period, so it will be more interesting to see how those numbers do this spring.

Jan 26 10:54 PM

[Guero:]

It's not a "distortion." It's actually true price/value discovery in progress. Most of this decade was the "distortion."

Yes it is an ugly sight, and people are getting hurt, but what you are witnessing is the market finding it's true level.

Jan 27 11:16 AM

[ArnoldCountry:]

"The odds are that the distortion is likely to persist for some time..."

This is what makes Tim one of my favorite contributors on here. At least in California, lets not lose sight of the wave of foreclosures building due to the slow down required under the legislative changes in July. Also, lets not lose sight of the "shadow inventory" that exists of homes that have been foreclosed on but which have not been placed on the MLS yet. This "shadow inventory" is purposely there to skew numbers. Add those numbers into the inventory numbers and I bet the months of supply would double. I am actually pretty shocked to hear the chief economist of NAR actually use the "D" word (depression) as he has a tendency to act more like Mr. Rogers and declare its a "wonderful day in the neighborhood."

Jan 27 03:47 PM