Prices Fall, Inventories Rise, NAR Spins

Sales of existing homes fell to a record low in October. What was the largest drop in home prices -- ever -- wasn't enough to revive sales. Inventory levels also climbed to record highs.

The data highlights:

• The national median existing-home price (all housing types) was $207,800 in October -- down 5.1% year over year (October 2006 = $218,900)

• Total housing inventory rose 1.9% to 4.45 million existing homes. This represents a 10.8-month supply. Inventory rose 1.9% for the month.

• Single-family home sales were down an astonishing 20.8% from October 2006.

• The median existing single-family home price was $205,700 in October, down 6.3% from a year ago.

• Existing condominium and co-op sales fell 20.2 % percent from October 2006; they are off 9.1% from last month.

• The median existing condo price was $223,500 up 4.9% percent from a year ago.

Chart courtesy of NAR, Lehman Brothers via Real Time Economics

Of course, the biggest laugh was the National Association of Realtors headline: Mixed Results For October Existing-Home Sales; Mortgages Improving. If by "mixed" you mean a combination of terrible and horrible, then I guess it's mixed.

Rex Nutting pulled this gem of a quote:

The fundamentals of the market don't support a further decline in sales, said Lawrence Yun, chief economist for the NAR, who said low mortgage rates and job growth should keep sales from falling. While the subprime mortgage market has disappeared, the Federal Housing Administration is picking up its lending.

"I don't anticipate any further major sales declines," Yun said. If sales do continue to fall, "it would be a major concern" and "would raise the risk of an economic recession."

It's worth reminding readers that Yun (nor his predecessor, the oft-hallucinatory David Lereah), have never in the past anticipated any sales decline.

If they were completely honest about this failure of expectations (rather than shilling for a clown outfit) the monthly commentary would read: "Geez, sales fell again? Wow, we didn't see THAT coming. No worries, next month should be fine . . ."

Source:

Mixed Results For October Existing-Home Sales; Mortgages Improving
NAR, November 28, 2007
http://www.realtor.org/press_room/news_releases/2007/ehs_oct07_mixed_results.html

Supply of homes on market at 22-year high
Rex Nutting
MarketWatch, Last Update: 10:14 AM ET Nov 28, 2007
http://tinyurl.com/32coee

See also:
Study Warns of Decline In Value of Homes
DAMIAN PALETTA
WSJ, November 27, 2007 5:57 a.m.
http://online.wsj.com/article/SB119615781800405134.html

Comments

[Brian B:]

It would be great to see a historical list of quotes from Yun's monthly press conferences and then show what the market did the following month. This would be nice way to show the true spin factor in a nutshell.

2007 Nov 30 06:38 PM

[zoomer:]

There's never been a better time to buy....blah, blah, blah! The NAR will keep that spin on autoplay forever.

2007 Dec 01 09:27 AM

[Jake2000:]

Does Yun or NAR have any credibility left at all?

Its kinda sad... even as a paid shill, Yun should realize that he'd be more effective if he was even in the ballpark and grudgingly admitted there was a major problem.

But I guess he and NAR are just making the cynical assumption that "a sucker is born every minute", and they just want to fool the uninformed into buying before the market hits bottom. Very sad on their part.

2007 Dec 01 11:22 AM

[curtisg165:]

Maybe Yun is referring to the fact that the federal government is working to freeze many variable rate loans at their existing interest rates; not allowing resets. This will create a "moral hazard" and will certainly send the wrong message while penalizing those who were prudent enough to avoid this whole debacle. People who made decisions based on the guaranteed home appreciation that Yun and Lereah adamantly predicted will benefit; as will NAR. This will even help Wall Street to collateralize the ugly SIVs and CMOs they created so as avoid heavy losses. The home buyer who was prudent and saved will, in reality, get to pay for all this with his taxes. Heck, its the American way!

2007 Dec 02 02:11 AM

[Pick Up Art...:]

I wonder if inventory increases are due to people becoming smart with their money.

Adam

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2007 Dec 03 10:06 PM