Existing Home Sales Awful, But Inventories Finally Dropping

Existing home sales for August came in at 4.91 million, slightly below the consensus of 4.93 million. This is down 10.7% year-over-year and below a revised 5 million last month. The rate of decline, however, is less than last month, when sales were 13% below last year’s pace.

The median sales price for a home fell to $203,100, down 9.5% year-over-year, which is an acceleration from 7% last month. So don’t look for a price-bottom anytime soon.

The good news is that inventories shrank for the second consecutive month, from 10.9 months of supply in July to 10.4 months of supply in August.  Given the weak sales, this is almost certainly due to frustrated sellers giving up and pulling their houses off the market (which is less positive than accelerating sales cutting down bloated inventories). Still, far better to have inventories shrinking than growing.

Bottom line: This report suggests that the housing decline is indeed beginning to moderate. We’re not at a bottom yet–and likely won’t be until mid-2009 at the earliest–but a moderation in the rate of decline is still a positive change.

See Also: Housing Market Continues To Show Early Signs of a Turn

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