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Wednesday, January 02, 2008

November 2007 Housing Statistics

So many numbers related to supply and demand, reported in so many different ways, and to complicate things, released at different times each month. We gather them up here each month, so here's the look at November, 2007, as released this past December.

The Quick Summary

A story too familiar and monotonous at this point. Inventories 40% or more above last year, sales 30% to 40% less than last year. No region of the country has been able to escape these trends.

Supply Factors: Falling Production + Too Much Inventory = A Long Road Yet
New Residential Inventories, (PDF), : November posted a 9.3 months' supply of new homes for sale. This is the second highest measure for the last 12 months. The index represents a 43% rise in supply from November, 2006.

Permits, Starts and Completions, (PDF), : Compared with November, 2006, permits are 24% less, starts 24% less, and completions 28% less. The numbers speak for themselves.

For new homes, The Wall Street Journal noted that this was the lowest level for permits since mid-1992, while Calculated Risk informs us that starts are at their lowest level since April, 1991. Paper Economy, (with a number of great charts), informs us that:
Moreover, every region showed significant double digit declines to permits...
We would put two ideas forward now about new homes. 1- the numbers represent what a long road it will be back to equilibrium, and 2- as Chief Economist David Seirs of The National Association of Home Builders noted:
...he's somewhat pleased because builders cannot reduce their inventories of unsold homes unless they cut production, particularly in light of weak demand and rising competition from existing home sellers.
We will leave the debate about what all this means to employment and the wider economy to others.

What About Individual Homeowners?

Existing Home Inventories, (PDF), : Inventories actually declined slightly from October to a 10.3 months' supply, which still measures up as 41% higher than last year, and 71.7% above the so called equilibrium point of 6.0 months' supply.

Who would buy in such a situation? Let's take a look at sales.

Demand Factors: Sales Down 34% to 41%
New Residential Sales, (PDF), : Interest Rate Roundup sums these numbers up as succinctly as any observer:
Sales plunged 9% to a seasonally adjusted annual rate of 647,000 from a revised 711,000 SAAR in October (previously reported as 728,000). On a year-over-year basis, sales were down 34.4% from 987,000 in November 2006. Sales haven't been this weak since April 1995...(Emphasis Added).

and later in the article...
Prices were largely stable. But the collapse in the sales rate suggests that won't last.
Paper Economy points out that no areas of the country were spared. New home sales were down from 28% to 38.7% in every region.

Existing Home Sales, (PDF): Existing home sales were 41% less than last year at this time, and Paper Economy wraps it up in this manner:
* Sales are down significantly in EVERY region and for BOTH single family and condo.
* Prices for single family homes declined for EVERY region.
* Prices for condos declined in every region but a, (sic), anemic gain in the South.
* ALL Inventory and Months Supply show significant increases on a year-over-year basis.
The Future By Way of the Past?
In the past we have gathered links to well known analysts in this section of our monthly roundup. Instead, of looking forward, let us look back. An article posted this morning at InterestRate Roundup looks at data back to the early 1960's. How does the current housing market stack up?
...worse than the '94-'95 drop (about 31%) and the '89-'91 downturn (-45%). It also tops the 42% decline we saw in '65-'66 and the 51% fall we experienced in '72-'74.
The only downturn we've experienced in modern history that was worse than this one was the '78-'81 collapse.
Google Trends tells the story graphically in one link.

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Black Bear Realty Website
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