FALLING... The sales rate for previously owned single-family homes dropped to its lowest level in about 10 years, and the price of resale single-family homes, condos and co-ops dropped 4.2 percent year-over-year in September, the National Association of Realtors reported today. The trade group also reported that the for-sale inventory of single-family homes reached 10.2 months in September, which was the highest level since February 1988 when it was 10.3 months.
The inventory is a measure of how many months it would take to exhaust the for-sale supply of resale single-family homes at the current sales rate. Total housing inventory, for single-family homes, condos and co-ops reached 10.5 months in September, which is up 43.5 percent compared to a 7.3-month inventory in September 2006. The seasonally adjusted annual rate of existing single-family, condo and co-op sales dropped to 5.04 million in September, down 19.1 percent compared to September 2006 and down 4 percent compared to Wall Street expectations of a 5.25 million rate. The adjusted annual rate is a projection of a monthly sales total over a 12-month period, adjusted to account for seasonal fluctuations in sales activity. It was the lowest rate for combined resale single-family and condo/co-op sales since the National Association of Realtors began reporting the property types together in 1999. The September single-family rate of 4.38 million was the lowest since January 1998, when it was 4.18 million.
The median sales price of existing homes dropped 4.2 percent to $211,700 and the average sales price dropped 3.2 percent to $257,800 in September compared to the same month last year, the Realtor group reported. It was the largest year-over-year drop in the monthly median price since October 2006 when the median price fell 4.3 percent.
Mortgage-market problems disrupted sales and prices, the National Association of Realtors reported, though prices rose in the Northeast and Midwest.
Existing-home sales for the third quarter reached an annual rate of 5.42 million, slightly higher than the group's expectations of a 5.38 million annual rate for that quarter.
SO....what's it all mean? Many of us in the real estate industry have October 31 marked on our calenders for reasons other than Halloween. It's the day of the next Federal Reserve meeting and most likely the day we'll see another interest rate cut. The only issue now is whether it's 25 or 50 basis points (1/4 or 1/2 reduction in the prime). Since major economic recessions have routinely followed significant downward trends in the housing market, one could make a good case for a half point reduction. All eyes will be on the Fed Governor's meeting on 10/31. Whatever they decide will be a major factor in our country's economy in 2008.
Here's another thing it means: The pent up demand for homes is getting pushed closer and closer to the edge of action. There will come a day soon when moderating prices and falling rates will shove the indecisive buyer back into the market. Whether that's in the 1st quarter of '08 or beyond are still to be determined. When it happens, those that have bought real estate in the trough that we're in now will be very pleased by their decisions.
AS ALWAYS you can reach me at 317.848.GREG (4734)