December Existing Home sales

I wanted to wait till the existing home sales figures came out this morning at 7 to post.

I'll be able to get into it deeper later but for now here's just the bare the facts.

Remember though that this report comes from the National Association of Realtors, (NAR) and is a national number. That means to a reader here in the SF Bay Area, these numbers may be a little skewed.
What happens in Podunk, doesn't always happen here.

"Sales of existing homes fell modestly in December, closing out a year in which demand for homes slumped by the largest amount 24 years.

Separately, the number of new claims for U.S. jobless aid jumped a larger-than-expected 36,000 last week, a government report showed, its biggest one-week rise in 16 months.

The National Association of Realtors said the pace of existing home sales fell 0.8% in December to a 6.22 million-unit annual rate, a slightly bigger decline than had been expected.

However, the inventory of homes for sale was down 7.9% to 3.508 million units at the end of December.

Analysts had expected home resales to fall to a 6.25 million-unit pace from the 6.28 million-unit rate initially reported for November.

The national median home price of existing homes was unchanged from a year earlier, holding at $222,000.

"The blood-letting in housing continues, although at a lessening pace -- on trend," said T.J. Marta, a fixed-income strategist at RBC Capital Markets. "Despite the downside surprise, this data series supports the notion that the trough in housing and overall U.S. growth is past, having occurred in Q3 '06."

For all of 2006, home sales slipped 8.4%, the sharpest decline since 1982, when they fell 17.7%."


If that sounded like gibberish - here's the scoop:
Existing Home Sales were down.
Key word in that was "sales".
Many times we forget what says.
That sentence means the actual number of units sold over that period of time was less than previous.

Two things come into play here, how many houses sold, and how much they sold for.
Two very distinct items.


The law of supply and demand then says rates should move lower (lower demand right?)
WRONG.
While the number of sales fell almost 1%,
The median and average price of homes either stayed the same (year over year) or rose slightly.

To the traders, the feds and all those who in some way effect the bond markets, and hence mortgage backed securities, this is a better report than you may think.

To those people, this is what they see in that report:
Over the last year, with headlines blazing "HOUSING BUBBLE TO BURST?",
we as a nation saw ZERO decline in median house prices!

"The national median home price of existing homes was unchanged from a year earlier, holding at $222,000. "

Inventories need to correct, and the number of units sold may be down or up, but in the end no loss in value. Nationally speaking, How cool is that?


I'll get back to what all this means and more importantly what it means to us here in the bay area later when I get the local data...

Stay tuned.