Housing Market: No Bottom in Sight

A pair of reports show the market is still in freefall.

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A pair of reports released Tuesday indicate that the housing market's painful declines are far from over:

Existing Home Sales:

Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 8.6 percent to a seasonally adjusted annual rate of 4.49 million units in November from a downwardly revised level of 4.91 million in October, and are 10.6 percent below the 5.02 million-unit pace in November 2007…

Total housing inventory at the end of November rose 0.1 percent to 4.20 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.3-month supply in October….

The national median existing-home price for all housing types was $181,300 in November, down 13.2 percent from November 2007 when the median was $208,800. There remains a significant downward distortion in the current price from a large number of distress sales at discounted prices; the median is where half of the homes sold for more and half sold for less.

New Home Sales

Sales of new one-family houses in November 2008 were at a seasonally adjusted annual rate of 407,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.9 percent (±13.9%)* below the revised October of 419,000 and is 35.3 percent (±11.4%) below the November 2007 estimate of 629,000.

The median sales price of new houses sold in November 2008 was $220,400; the average sales price was $287,500. The seasonally adjusted estimate of new houses for sale at the end of November was 374,000. This represents a supply of 11.5 months at the current sales rate.

Here's what Mike Larson, a real estate analyst at Weiss Research, had to say about the figures in a report of his own:

At the risk of sounding like a broken record player, the latest housing market figures still paint a grim picture. Both new and existing home sales fell in November. For-sale inventory readings remain at or near all-time highs. Home prices continue to slump, with double-digit declines on both the new and existing sides of the ledger.

Treasury and the Fed are doing all they can to lower mortgage rates and stem foreclosures. But they're having a very tough time fighting the simple law of supply and demand. The housing market remains dramatically oversupplied, despite very sharp cutbacks in new home construction. Moreover, demand remains weak due to slumping consumer confidence, tighter lending standards, and rising unemployment.

Bottom line: It's going to take even more time and even lower home prices to get back to a healthy [state] of equilibrium in housing. Anyone looking to Washington for a quick fix to this downturn is going to be disappointed[.]

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