New And Existing Home Sales Continue Retreat From Record Highs
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First read the press
release issued on Tuesday by the National Association of Realtors regarding
data on the sale of existing homes in December and for all of 2006 and then
read the New York Times article
on the same topic. We will then have a spirited discussion on the subject of
reality, slant, and spin.
NAR called 2006 the third-highest sales year on record (after 2005 and 2004)
while using the term "eased" to describe the 0.8 percent seasonally adjusted
decline in the annual rate of home sales in December as compared
to revised rates in November (6.22 million versus 6.27 million). The Times on
the other hand took the view that the 2006 figures represented the sharpest
year over year decline in 17 years and the December figures showed a larger
decline than analysts had expected.
Well, here are the figures, draw your own conclusions.
In addition to the November to December change noted above, sales of
existing homes (including single-family, town houses, condos, and co-ops)
dropped from 7,075,000 for all of 2005 to 6,480,000 in 2006, a decline of 8.4
percent. This is the 17 year record cited above. Annualized sales in December
2006 were 7.9 percent lower than in December 2005.
David Lereah, NAR's chief economist, said home sales remain historically
high. "Despite all of the doom-and-gloom stories and dire predictions
over the last year, 2006 was the third strongest year on record for existing-home
sales," he said. "It looks like we're moving beyond the low
for the housing cycle last fall, and buyers are responding to historically low
interest rates and competitive pricing by home sellers. In addition, a tightening
inventory of homes on the market is supporting prices."
The inventory of available existing homes dropped to 3.51 million at the end
of December, a 7.9 percent decline from November. This is a 6.8 month supply
at the current sales pace compared to a 7.3 month backlog in November.
The median home prices for all housing types was $222,000, identical to the
median price one year earlier. This was also the median price for all of 2006
which represented a slight increase from the median for 2005 of $219,000.
If only single family homes are taken into account, those sales slipped 1.3
percent to a seasonally adjusted annual rate of 5.44 million in December from
5.51 million in November. Sales for 2006 were down 8.1 percent to 5.68 million
compared to 2005 and were, like overall sales, the third highest on record.
The median price for an existing single family residence was 221,600, again
unchanged from December 2005.
The Census Bureau and the U.S. Department of Housing and Urban Development
released their joint report on new residential sales for December
on Friday. New home sales were at a seasonally adjusted annual rate of 1,120,000
units, an increase of 4.8 percent above the revised November figures but 11
percent below the rate in December 2005. A total of 1,061,000 new homes were
sold last year, a 17.3 percent decline from the 1,283,000 sold in 2005.
The median home price in December was $235,000 and the average was $290,100.
In November the median sales price was $251,700 and the average price was $294,900.
There are an estimated 537,000 new homes currently on the
market, a supply of 5.9 months at the current sales rate. The revised figure
for inventory backlog in November was 6.1 months.
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