Reclaiming Common Sense

Existing Home Sales Better than October 2007 isn't Saying Much

Yesterday the October Existing Home Sales data was released. the data from September saw some upward revisions for the September units sold and average sales price. The inventory level was revised downward. This month the data was good - it wasn't great - it wasn't terrible. When you have to say it wasn't terrible it is rather inauspicious.

October Units Sold Comparable to Past Three years - Slower than 2001-2006. There are numerous ways that the data can be analyzed, realizing that all real estate is local and that the national data is a 30,000 foot level perspective. We can analyze units sold, sales price, inventory, and annual trends.There are seasonal variations in real estate and consistency with any given month. If we compare October Only data we can see where we really are regarding sales without the use of seasonal factors. We saw 446,000 units sold - virtually identical to 2014 and 2015. This is down by over 100,000 units from October 2003, 2004, and 2005. It is also up by roughly  150,000 units from the bottom of the October existing home sales mark of October 2010. It appears to have plateaued.

October Sales Price finally eclipses October 2005 Level. The average sales price for October just eclipsed the October 2005 value. A ten year recovery is a long recovery for sales prices. We used to see annual variations in prices meaning that it was difficult for someone to buy and sell the same house  within one calendar year. Often you could do it within 24 months of purchase.

Are we really Doing Better than October 2008? The media was touting this report as being good because we were supposedly on pace to sell more homes than 2007. If we use the rolling year data this is true. This is a backward looking measure. It tells us where we have been. We are nowhere near the level of annual sales we saw during 2007. We aren't even at the level we saw during 2003.This 5.4 million annual units value is suspect at best and a lie at worst.Also, remember that during 2008 the wheels were coming off the economy and we were already three years into a housing slowdown with peak units sold during 2005 and peak prices during 2006.

The Current Year data shows us tracking with 2015 and between 2000 and 2001 levels. It really takes a minimum of three months of data for a current year to see a trend. It is also important to see the Mat, June, and July data to be able to get a handle on where we may e heading. October data paints a very clear picture on where we may be heading for November and December. The current year data shows that we should fall around 5.25 million units sold - the same as last year. This would fall between the 5.33 million we saw during 2001 and the 5.171 million we saw during 2000. 

We have lost over a decade of growth. If it is going to take us 4 more years to reach 2005 levels of sales that places us into 2020.Housing sales spur other sales: Furniture, Electronics and Appliance, Home and Garden, even automobile sales. Who wants a clunker in a new garage?

Existing Units Dropped Month to Month more than almost any other October. The only other October that was worse for units sold was October of 2005 - the start of the housing recession. Year to year October sales prices grew at  a paltry 0.5%, one of the slowest on record without actually declining.

Yesterday's housing report was inauspicious at best - misleading at worst.

It's the Economy.