OK, so by now you have heard that existing home sales were up 10% in August. At least that’s what the NAR and the mainstream media reported. Yes, there were some qualifications added to those media reports. Here are a few facts, or as Paul Harvey would say, “The rest of the story”.
Sales were down 8.5% month to month. The seasonal hocus pocus is particularly misleading this month because sales were already extremely depressed for this time of year. The fact is that the market is getting worse. Volume was 379k in September, down from 414k in August. This compares with 498k in August 2009, and 468k in September 2009. Sales are down 19% y/y. This is the worst September in at least the last 10 years.
Median prices were down a whopping 4% m/m and are now down 6.5% since June. This reflects the removal of the artificial price distortion caused by the homebuyers’ tax credit. This is a return to a real market based price, rather than one artificially and falsely inflated. Or at least it’s market based to the extent that it is also skewed by the Fed’s mortgage rate subsidy via its purchases of Treasuries.
In addition to the other seasonal hocus pocus, the NAR also adjusted August inventory up from 3,982,000 to 4,117,000. That enabled them to report an inventory decline to 4,040,000. Inventory is up 330k units, or 8.9% y/y. The inventory to sales ratio stands at 10.66 vs. 7.93 last September.
Any way you look at the real numbers, they are catastrophic. The idea that there’s any improvement at all here is just completely false.
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