Tuesday, May 20, 2008

You May Still Be Able to Sell, If You Realize It's Really 2004

Wanna Buy A Home?
By Floyd Norris, Chief Financial Correspondent, NYTimes

Back in Econ 101, I learned that if you cut the price of anything, the supply will shrink and demand will grow.

It isn’t working in the home market these days.

The report on existing home sales today shows that — for the first time since they started keeping the data in the early 1970’s — the median price of existing home sales is lower than it was three years earlier. (I use three-month moving averages to compute the data.)

But sales continue to fall, although you can make a case that they have been moving in a narrow range for several months, after applying seasonal factors. The rate of sales is now almost 30 percent lower than it was three years earlier, something that was last seen in the 1980’s. [bolding ours! --Real.Cville]

And the number of existing single family homes for sale rose to 3.9 million in April, easily beating the record set last summer.

The closest thing to a glimmer of hope in the report is that the pace of single family home sales seemed to pickup in the West. “This would suggest that perhaps the intense downdraft in prices in troubled markets, some of which is being dictated by foreclosure activity, is beginning to draw in buyers,” said Stephen Stanley, Strategist at RBS Greenwich Capital.

Perhaps that is the beginning of a trend. And perhaps not. There is no such trend visible in condo sales, in the west or elsewhere.

The prime selling season for existing homes starts in May and runs through August. Nearly 40 percent of the year’s sales take place in those four months. If sales fail to pick up this summer, it won’t be for lack of available homes.

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