Prices, and Sales, and Inventories—Oh My!

Posted by: Maya Roney on September 26, 2007

The weather isn’t the only thing getting chillier as we move into the fall season. Yesterday, the National Association of Realtors reported that existing-home sales fell 4.3% in August from July to a rate of 5.5 million, and according to the S&P/Case-Shiller home-price index (also announced yesterday), home prices in July fell 3.9% from a year earlier. Even worse: the NAR said total inventories of unsold homes rose 0.4% in August to 4.58 million. That’s equal to a 10-month supply and the highest in 18 years.

The rate of home sales isn’t so scary; it matches that of pre-boom levels. “Like new homes, if we just erase from our memory the period of 2002-2006, the current sales volume seems tolerable if not ‘normal,’” writes Jonathan Smoke on his always insightful “Housing Intelligence” blog. The really big problem is the rising inventory level. “Inventories are the concern and the albatross that does not bode well for a positive 2008,” Smoke says.

Check out a chart comparing home sales and inventories here at Smoke’s blog.

Reader Comments

Dan Holbrook

September 29, 2007 1:52 PM

The sales rate is not as frightening as what is looming on the horizon. Look to the foreclosure filings, the loan valume taken back by lenders at the foreclosure sale. The future of the market is going to be driven by REO's, builder discounts, and panicked homeowners. The major culprit here thow are the lenders that cannot seem to provide any other real solution except to foreclosure on a borrower that cannot make a payment. I own a company that does lender negotiations for short sales (lenders taking less than what is owed to avoid a foreclosure). Despite the fact that these solutions can save the homeowners thousands of dollars, the lenders thousands more and all the neighbors in the area millions more in their home equity, the lenders lack the ability, desire, flexibility, ingenuity???? to make a good decision. The real estate industry needs to develop a new skill to navigate the distress market, to be able to communicate and work with lenders to ease the pain of homeowners accross this nation that is need of help. Realtors and their lenders are the only ones that can help are they either lack the skill or desire to lend a hand. I have spoken to 5,000 real estate agents in the last 90 days in seminars done to help real estate agents raise the bar in the industry and develope the skills to help consumers in distress, stabalize this market and preserve the integrity (or improve it) of our indusrty. shortsalesupport.com is a distress market resource and paydirtseminars.com is an educational platform to help the industry develop the skills for the challenge that we are facing with housing and real estate.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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