RECOVERY: Existing Home Sales Highest Since Feb. 2007, Inventory Levels Lowest Since April 2006
Highlights from today's report on existing home sales:
1. Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.4% to a seasonally adjusted annual rate of 6.54 million units in November from 6.09 million in October, and are 44.1% higher than the 4.54 million-unit pace in November 2008. Current sales remain at the highest level since February 2007 when they hit 6.55 million (see top chart).
2. Total housing inventory at the end of November declined 1.3% to 3.52 million existing homes available for sale, which represents a 6.5-month supply at the current sales pace, down from a 7 month supply in October. Raw unsold inventory figures are 15.5% below a year ago. The last time there was a lower supply of homes on the market was April 2006 when it was at a 6.1 months supply (see bottom chart above).
Bottom Line: The news today confirms that the national real estate market is in a gradual, but unmistakable recovery. Home sales have increased in 7 out of the last 8 months, and by almost 1.5 million units combined for the last three months (450,000 gain in Sept., 550,000 in Oct. and 450,000 in Nov.). From the March low of 4.55 million units, November sales are up 44%. Home prices have firmed and stabilized, and the balance between the supply and demand (measured by the months supply of inventory) has returned to the 2006 level. Taken together, these trends provide strong evidence that the worst is definitely behind us for the U.S. housing market, market conditions are returning to pre-recession levels, and even better days are ahead.