U.S. Home Sales
Chart of the Week for Nov. 7, 2008 - Nov. 13, 2008
The U.S. Census Bureau and the National Association of Realtors recently released figures on new and existing home sales. The figures illustrate what is an oddly bifurcated housing market. Home Sales have historically moved in similar directions as most people that buy a new home have to sell an existing home. Recently, the sales of existing homes increased as those of new homes have decreased. The chart above illustrates this trend by comparing existing home sales and new home sales over the last year. The sales of existing homes are up 1.37% from September 2007, while sales of new homes are down 33% from September of 2007.
Among various factors, declining sales prices may be causing what analysts believe is a decoupling in the housing market. The drop in the average sale price has been greater for existing homes than for new homes over the last year. The average sale price of an existing home has dropped 8.98% since September 2007. The average sale price of a new home has dropped 4.34% since September 2007. Existing home sellers may be feeling pressure to sell at a loss as possibly up to 40% of existing home sales are distressed sales according to the National Association of Realtors. Compounding the price pressures is a 9-10 month inventory of existing homes that may be enticing home buyers away from new homes.
The future direction of the housing market remains uncertain as consumer purchasing power is affected by the state of the economy, interest rates and tighter credit conditions.
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