WASHINGTON - Sales of existing homes posted a tiny increase in October but the median home price fell by a record amount. Analysts forecast more price declines in coming months as the once-booming housing market undergoes a painful correction.
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The National Association of Realtors said Tuesday that existing home sales edged up 0.5 percent to a seasonally adjusted annual rate of 6.24 million last month. It was the first increase after seven consecutive monthly declines.
However, the median price for a home sold dropped to $221,000 in October, a decline of 3.5 percent from a year ago. That was the biggest year-over-year price decline on record.
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O.C. home inventory in seasonal slide
O.C. home inventory tracker Steve Thomas says "in the past two weeks, the active inventory shed another 593 homes, dropping to 13,572 homes. ... The drop in the active inventory is due to so many sellers throwing in the towel as we move further into the Holiday market. We can expect many more sellers who really do not have to sell to opt to pull their homes off the market rather than expose their homes to the slowest time of the year. With more and more sellers realizing the weakness in both the Fall and Holiday markets, the active inventory has descended to 2,434 homes since reaching its peak for 2006 on August 24th, 16,006 homes." That 15% drop from the cyclical peak is more a seasonal switch than a sea change.
Thomas at Re/Max Real Estate Services in Aliso Viejo creates a "market time" benchmark that calculates how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made. He's found that recent falling supply has pretty much matched dropping demand.
By this Thomas logic, it would take 7.09 months for buyers to gobble up all homes for sale at the current pace vs. 7.13 months two weeks earlier BUT still way above 3.36 months a year ago.
Thomas notes: "The number of homes pulled off the market over the past month has been very encouraging. The active inventory may drop down to 12,000 homes. HOWEVER, last year we started the year with 8,098 homes on the market. That’s almost 4,000 fewer homes than what is expected to begin 2007. With so many sellers pulling their homes off the market now only to place them right back on the market in the Spring, coupled with a number of new sellers who did not market their homes in 2006, the active inventory could climb to nearly 20,000 homes." A snippet of Thomas's latest analysis, as of Nov. 30:
From the OC Register
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