Existing homes sales decline slightly; prices decline sharply

The National Association of Realtors released the existing home sales figures for October 2008 today.  Sales decreased to a seasonally adjusted annual rate of 4.980 million units in October, down 3.11% from September 2008 and down 1.58% from October 2007.  The median sales price was $183,300 for October down sharply from $191,400 in September (down 4.2%) and down from $206,700 in October 2007 (down 8.98%).  The price decline was led by the West where the median price declined by 9.3% compared to the previous month.  March through August are the strongest months for home prices. We are now entering the weak time for home prices. The market turmoil is not helping things either. 

According to Lawrence Yun, NAR chief economist:

“Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions.  We have favorable affordability conditions, but we need more than that to give buyers with jobs the confidence they need. This is why a housing stimulus is so critical now to encourage more buyers to draw down the inventory and stabilize home prices. Without home price stabilization, there will not be an economic recovery.”

I agree with Yun in that this recession is being led by the housing crisis.  I believe that we won't see the bottom until the real estate bottom is in sight.  Month's supply rose from 10.0 in September to 10.2 in October. Month's supply is normally lowest in the winter months. There is a huge oversupply of homes that the industry has to work through before supply and demand is balanced.

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