Trending Real Estate

NAR existing home sales increase by 7.8% in September

The National Association of Realtors has released the existing home sales numbers for the month of September. Here's how the numbers look in pictures.

Picture #1:Sales increased in September, the first month with a year-over-year increase since the fall of 2005.  September sales totaled 442,000 units, up 7.8% from the 410,000 units that sold in September of 2007.

 

Picture #2:The 7.8% volume increase in September was a sharp reversal from the existing trend. Prior to September, volume had decreased on a year-over-year basis by at least 10% for 13th straight months.

   

Picture #3: Excluding 2007, sales this past September represented the lowest volume month since September of 2001.

    

Adding it all up: This is a good step for the market, but a trend toward increasing sales may be tough to establish given the current economic slowdown.

August existing home sales decrease

The National Association of Realtors has released the existing home sales numbers for the month of August. Here's how the numbers look in pictures.

Picture #1: Sales decreased in August, continuing the trend that started in the fall of 2005. August sales totaled 489,000 units, down 15% from the 575,000 units that sold in August of 2007.

Picture #2:The 15% volume decrease in August was the 13th straight month with a sales decrease of at least 10%. The trend toward fewer sales has moderated somewhat in recent months, with each of the last 5 months registering a volume decrease of under 20%.

   

Picture #3: Sales this past August were the lowest out of every August dating back through at least 1999.

   

Adding it all up: The housing market needs more buyers. Inventory will not decrease in a meaningful way until more buyers jump into the market.

NAR July existing home sales in pictures

The National Association of Realtors has released the existing home sales numbers for the month of July. Here's how the numbers look in pictures (without any seasonal adjustments):

Picture #1: Sales decreased once again in July, continuing the trend that started in the fall of 2005. July home sales totaled 501,000, a decrease of 11.8% from the 568,000 units that sold in July of 2007.

Picture #2: The 11.8% decrease in July is the twelfth straight month with a year-over-year decrease of at least 10%.

Picture #3: Sales volume in July was at its lowest level since July, 2000.   

Next up: How housing supply has changed over time.

Real estate is all about the seasons

Let's revisit this graph from our previous post, which shows unadjusted existing home sales volume dating back to January of 2005.

A few things stand out when I look at this graph:

1. January is always the slowest month for home sales.
2. Starting in February, home sales always increase in each of the 5 following months, where they peak in June.
3. Starting in July, home sales start to recede from the peak until they bottom out in January and the cycle starts all over again.

There is an interesting nuance for the month of August. August typically includes a jump in sales from the month of July (but remains below the peak month of June). Most likely this is due to the large group of buyers who are working to close on their homes before the beginning of the school year.

Given all that we know about seasonality, here is my take on what is wrong with many national media reports (for example):

1. Month-to-month comparisons only make understanding the trends more confusing. The best way to make comparisons is on a year-over-year basis (see graph above).
2. Seasonally-adjusted numbers don't add value. Why is a seasonal adjustment necessary when all we need is the unadjusted numbers from the same month of the previous year?

Next post: a look at the existing home sales numbers for the month of July.

Making sense of NAR existing home sales

A host of media outlets report the seasonally-adjusted existing homes sales figures that are published monthly by the National Association of Realtors. The typical report, which emphasizes month-to-month changes, doesn't work for me. It doesn't do a good job of articulating the prevailing trends, which we all know are heavily influenced by the seasons.

I find trending to be a lot easier when I track the unadjusted sales figures and put them into a few simple graphs. Here's what I see when I put the unadjusted existing home sales numbers into pictures:

Picture #1: Existing home sales have been declining on a year-over-year basis (noted by the red data points below) since late 2005.

Picture #2: Year-over-year existing home sales have decreased by at least 15% each month dating back to September of 2007.

Picture #3: June of 2008 was the slowest June for existing home sales in at least 10 years.

My take: The macro numbers show that sales have decreased to levels we haven't seen in a long time, while common sense says sales need to move higher before inventory decreases in a meaningful way. Until that time comes, expect continued pressure on prices.