Existing home sales down 21%

News item: "Sales of existing homes fell for an eighth straight month in October even as more properties came on the U.S. housing market, driving the supply of homes up for sale to the highest level in 22 years, the National Assn. of Realtors reported Wednesday."

More, from Marketwatch: "Seasonally adjusted sales dropped 1.2% to an annualized pace of 4.97 million last month, the real-estate advocacy group said. The sales pace stands at the lowest seen since 1999, when the group began tracking combined sales of single-family homes and condominiums."

More, from the NAR news release:

--Existing home sales in October were down 20.7% from 2006 levels.

--Total inventory of unsold existing homes rose 1.9 percent at the end of October to 4.45 million existing homes for sale, which represents a 10.8-month supply at the current sales pace, up from a 10.4-month supply in September.

--From Lawrence Yun, NAR chief economist:  “As noted last month, temporary mortgage problems were peaking back in August when many of the sales closed in October were being negotiated.  We continue to see the biggest impact in high-cost markets that rely on jumbo loans,” he said.  “Mortgage availability has improved as evidenced by much lower mortgage interest rates and a sharp jump in FHA endorsements for home purchases.

Thoughts? Comments? Email story tips to peter.viles@latimes.com.

Comments

[Rob]

Yun also said today "he believed the drop in sales, which left activity in October 20.7 percent below the level of a year ago, was nearing its end. He said a greater willingness of lenders to start offering jumbo loans again and the use of Federal Housing Administration-insured loans in place of subprime mortgages will help generate a rebound."

Wheew, now I feel better. You had me worried Yun.

[Tim K.]

From the CBS Marketwatch article:

"I don't anticipate any further major sales declines," Yun said. However, the NAR didn't anticipate the sales declines of the past two years, and it's been predicting a bottom nearly every month since early 2006.

I sense the CBS Marketwatch editors are starting to notice that the NAR is not being entirely, well, unbiased in its appraisal of the situation.

[Horizontal Translation]

Check out the post at blownmortgage.com for a revealing look at how high ficos and great payment history really don't cut it when you look at total financial picture of borrowers (and then extrapolate to the jumbos to realize just how much it's more than just a subprime problem):

http://tinyurl.com/yw8ndo

[Jason]

Not really sure why it's worth posting what the NAR says. Being that they have a vested interest in seeing the real estate market take off at the expense of everyone else, they're like a PR agency coming out with these crazy twists on reality. There's a LOT more correction coming up ahead. Kind of weird that the "chief economist" doesn't use numbers to back his theories. If he doesn't want to look at empirical evidence, he should AT LEAST know that busts typically last twice as long as booms.

[Jason]

By the way, the reason why sales are lagging isn't because people can't get loans. It's because PEOPLE CAN'T JUSTIFY OR AFFORD PAYING THE INSANE PRICES. The market has changed as the demand for homes come from families who actually want to live in the houses they buy, vs purely for investment purposes. Affordability levels are at an all-time high (or low, whichever way you want to look at it), as people realize they cannot afford to pay 62% of their income on mortgage payments.

[mike]

THE BOTTOM IS ALWAYS A GOOD TIME TO BUY. THE MARKET HAS NOWHERE TO GO BUT UP. I AM GOING TO WAIT FOR THE BOTTOM BEFORE I START LOOKING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[adrian]

At first, when I red all the bad news from Yun, I told myself that he finally got it, I mean stopping lies about rebound.
But, in the end he proved to be "business as usual".

[Bob]

Home prices will be down another 16% next year in 2008.

[jaded]

I wish the media would stop quoting Yun and the NAR. It's like reading a Pravda story about May Day.

[kathleen fairweather]

That's not the only drop. I've had to do some updating/renovating on my home and have spent the last two weeks at living Home Depot or Lowe's. It shouldn't surprise anyone that sales are down and the staff was sitting around waiting for customers -- much like realtors at a Coldwell Banker office.

I conducted a very unscientific poll and was told by employees that business is way down due to the housing market and there's talk of lay-offs.

On the bright side, if you have to go to Home Depot or Lowes, the sales force overwhelms you with helpfulness - much like you'd get at a Ferrari dealership. (I'm surmising this as I have no experience buying a Ferrari).

[Martin]

Twentyone percent? On my hilldside block it's 100%. Nothing is selling. Renters are moving in, sharing high monthly costs with loads of roommates and reveling in their higher market luxury homes with late night pool parties. ...A sign of the times. Signs suck.

[caliguy2699]

"Affordability levels are at an all-time high (or low, whichever way you want to look at it),"

Not any more! Affordability in LA County is now a whopping 3.7% - up from 3%. Lowest point: 1.8% last year.

Source: http://www.nahb.org/page.aspx/category/sectionID=135