Today's Existing Home Sales Number Confirms More Price Declines To Come

The NAR reports: Existing-Home Sales Move Up in August

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 per cent to a seasonally adjusted annual rate of 4.13 million in August from an upwardly revised 3.84 million in July, but remain 19.0 per cent below the 5.10 million-unit pace in August 2009.

Total housing inventory at the end of August slipped 0.6 per cent to 3.98 million existing homes available for sale, which represents an 11.6-month supply at the current sales pace, down from a 12.5-month supply in July.

existing

Photo: Calculated Risk

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in August 2010 (4.13 million SAAR) were 7.6% higher than last month, and were 19.0% lower than August 2009 (5.1 million SAAR).The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased slightly to 3.98 million in August from 4.01 million

existing

Photo: Calculated Risk

in July. The all time record high was 4.58 million homes for sale in July 2008.

Inventory is not seasonally adjusted and there is a clear seasonal pattern with inventory increasing in the spring and into the summer. I’ll have more on inventory later …The last graph shows the ‘months of supply’ metric.

existing

Photo: Calculated Risk

Months of supply decreased to 11.6 months in August from 12.5 months in July. This is extremely high and suggests prices, as measured by the repeat sales indexes like Case-Shiller and CoreLogic, will continue to decline.

These weak numbers are exactly what I expected. Ignore the median price! Double digit supply and the low sales rate are the key stories. I’ll have more … 

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This post previously appeared Calculated Risk >

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