Monday, October 25, 2010

Home Sales Begin Rebound, Inventory Gauge Falls

"The homebuyer tax credit artificially boosted home sales in the Spring and then – after taking sales away from the future – the lapse of the credit caused a “hangover” in the Summer. Now sales are rebounding without artificial government support. Sales are up two months in a row and came in well above consensus expectations in September." 

MP: The charts above help tell the "artificial stimulus and hangover" story.  After the homebuyer tax credit ended, existing-home sales dropped precipitously by 27% in July, and the months supply of inventory increased to 12.5 months in July from 8.9 months in June.  Now that market forces are prevailing again, the real estate market is rebounding on its own, with a strong boost from record-low mortgage rates (currently at 4.21%).  Since the bottom in July of 3.84 million homes (seasonally-adjusted annual rate), sales have increased in the last two months to 4.53 million units in September, which is 18% above the July low.  The months supply of home inventory fell two months in a row, to 10.7 months in September.


At 10/25/2010 2:21 PM, Blogger morganovich said...

this is a little misleading.

inventory did not fall, it rose. it just went down measured in months.

"Although inventory decreased slightly from August 2010 to September 2010, inventory increased 8.9% YoY in September. This is the largest YoY increase in inventory since early 2008.

Note: Usually July is the peak month for inventory."

the core logic august numbers show deterioration:

"CoreLogic ... today released its Home Price Index (HPI) which shows that home prices in the U.S. declined for the first time this year. According to the CoreLogic HPI, national home prices, including distressed sales, declined 1.5 percent in August 2010 compared to August 2009 and increased by 0.6 percent in July 2010 compared to July 2009. Excluding distressed sales, year-over-year prices declined 0.4 percent in August 2010. ...

“Price declines are geographically expanding as 78 out of the largest 100 metropolitan areas are experiencing declines, up from 58 just one month ago” said Mark Fleming, chief economist for CoreLogic. "

At 10/26/2010 8:54 AM, Blogger misterjosh said...

Morganovich - of course it's a YoY increase! You're comparing a subsidized year with an unsubsidized year!

CoreLogic's deterioration is Mark's market forces. Lower prices will lead to more sales.

I do take exception to part of Perry's original post - That low mortgage rate is just another subsidy, and low rates are one of the things that got us into this mess! Bernanke's ego is going to get us in as much trouble as Greenspan's did.

At 10/26/2010 9:17 AM, Blogger juandos said...

Interestingly Professor Mark sees falling prices for housing as market forces at work which seems like a good thing...

Seems logical to me...

Over at the Business Insider it seems to be a reason for hand wringing: Case-Shiller Weak: Home Prices Down In 15 Of 20 Markets

The folks at ZeroHedge seem to think its a bit of bad news also: A "Disappointing" August Case Shiller Misses, Prints 1.7% On Expectations Of 2.1%, Previous At 3.18%, Smallest Since February

My question is, just how important are reports from Case-Shiller?

Over time wouldn't housing prices start to rise when inventories start to fall?

Could there be even more housing inventory coming onto the market due problems not yet discussed much?

At 10/26/2010 10:32 AM, Blogger morganovich said...


my point is that describing these results as an inventory decline is misleading.

inventories are still going up, and that's only for listings. banks have a large number of properties that are not on the market at all and therefore not in these numbers.

i too think that further price declines will be a good thing. all this federal meddling accomplished was to delay the market finding a clearing price.

that said, i think high inventories are going to be with us for some time.


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