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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Saturday, March 08, 2008

January 2008 Housing Statistics

Each month, housing statistics dribble out over the course of a week or so. We round 'em up, in a supply and demand format, all in one place for easy reference.

The Quick Summary
The picture of rising supply, in spite of drastically falling production is too familiar by now. For many months now no region of the USA has escaped the pattern of falling sales units, falling prices, and falling production, yet rising inventory. With inventories anywhere from 50% to 60% higher than last year, it will be many more months before the basics of supply and demand reach stability.

Supply Factors
New Home Inventory, (PDF): The latest numbers show a 9.9 months' supply of new homes. This is a new high for the past 12 months and is 65% above the so-called "normal" level of 6 months' supply.

That inventories should rise is notable enough after the dramatic slowdowns in new building for the past year. However, falling demand has consistently outpaced repeated 20% to 30% declines in production so that the latest numbers represent the highest inventory levels since the dark days of 1981.

Permits, Starts. Completions, (PDF): These three indexes were down 33.1%, 27.9%, and 26.7% respectively from January, 2007. Interest Rate Roundup provides further context on building. Declines of this magnitude would be big news in any industry, but are merely repetitive for housing at this point.

Existing Home Inventories, (PDF): Expressed as "months' supply", were 53.7% higher than January, 2007, tied for the highest level in the past 12 months. Not much elaboration necessary as to what any of this means for buyers and sellers.

Demand Side Factors
New Residential Sales, (PDF): In the words of Paper Economy, new home sales for January, 2008 showed a:
...continued deterioration of the already hideous falloff in demand for new residential homes both nationally and in every region resulting in an astounding median sales price drop of 15.09%.

On a year-over-year basis new home sales are continuing to weaken, dropping a truly ugly 33.9% below the sales activity seen in January 2007 and plunging a whopping 56.67% since the peak set in July 2005.
In the South, things were slightly worse, where new home sales declined 34.8% from a year earlier.

Existing Home Sales, (PDF): This index declined 23.4% from a year ago. We like Paper Economy because they never mince words, and always provide context. The existing home sales report provides:
...confirmation that the nation’s housing markets are declining dramatically with EVERY region showing significant double digit declines to sales of BOTH single family homes and condos as well as large increases to inventory and a continued explosion in monthly supply as a result of the collapsing pace of sales.
In the South, sales for single family homes declined 22.0%, with median prices down by 5.9%.

The Forecast
Inventories on a months' supply basis continue to rise, despite big cutbacks in production and declining prices. When this severe imbalance is finally rectified, it will not occur in an instant, but will be seen coming from months away. This gives buyers no reason to act, and provides those who need to sell with some difficult decisions on price.

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Black Bear Realty Website
828 689 2055
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