Current Events, Existing Home Sales, News

Existing home sales tumble


From CNN:

Sales of existing homes fell in October and prices continued to decline as potential buyers remain sidelined by the weak economy, according to a real estate group’s report issued Monday.

The National Association of Realtors reported that sales by homeowners slid in October to an annual pace of 4.98 million. That was down 3.1% from September’s revised reading of 5.14 million.

Economists surveyed by were expecting sales to have declined to an annual rate of 5.05 million in October.

On a year-over-year basis, sales were down 1.6%.

“Many potential homebuyers appear to have withdrawn from the market due to the stock-market collapse and deteriorating economic conditions,” said Lawrence Yun, NAR chief economist, in a statement.

The national median existing-home price in October was $183,300, down 11.3% from a year ago when the median was $206,700. In September, the median existing-home price was $191,400.

October’s median existing-home price was the lowest since March 2004, when it stood at $183,200. That means that homeowners who has lived in their homes for 4-1/2 years are seeing their homes worth the same or less as when they bought them.

Home prices were pushed down by a large number of foreclosures and distress sales, which distorts the comparison to last year’s October median price, said NAR spokesman Walter Molony.

“About 45% of all sales in October were distressed sales,” Molony said.

There is nothing about this report that isn’t ugly:

  • There is no doubt¬†that values are falling at an accelerated pace. Instead of levelling off, home prices are dropping more and more;
  • 45% of sales are foreclosures is a staggering number, with wide implications. Not only are such sales quickly becoming the norm (it’s hard to call them “distressed” when they make up nearly half of all sales!), they have a devastating effect on the values of homes around them;
  • A drop in inventory represents only what is currently being listed, and unfortunately banks don’t list all of their REO properties;
  • As values continue to decline, more and more homeowners will walk.
It’s a vicious feedback loop with no end in sight.

Sumersault, originally uploaded by sabeth718.

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