Thursday, September 23, 2010

On Existing Home Sales

Existing home sales were up 7.6% in August, but keep in mind this follows a -27% decline in July, which was the first post-tax credit month. It's really just the market adjusting, at a much lower sales level, to the tax credit. There is nothing strong about the sales number.

Further, distressed sales accounted for 34% of sales in August which was in line with the 32% in July.

Ted Weiseman at Morgan Stanley reports on this continuing nightmare:

A home has to be listed for sale on an MLS to be counted in this number, and there is some significant number of homes, perhaps in the one million unit range, where the bank has foreclosed and taken ownership but not listed the home for sale yet. On top of this, there were 2 million mortgages in foreclosure proceedings at the end of Q2 and another 2 million mortgages that were over 90 days delinquent and based on recent results almost certain to default.
The stock of homes currently offered for sales was about unchanged at 4 million units (not counting the expected additions that Weiseman expects). On a months’ supply of existing homes basis the number is basically at a year at 11.6.

There won't be any "recovery" in housing sales and prices until the Fed starts printing money to bail out the Treasury.

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