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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.

Tuesday, July 29, 2008

June 2008 Real Estate Statistics

Every month, we round 'em up, the major numbers in one snapshot, for your convenience and reference.

The Quick Summary
One caveat here is to bear in mind that any of this data is being compared to the already depressed numbers of June, 2007. A small bright spot occurs with new home inventories declining. However, in the overall, while the raw number of homes for sale continues to decline, sales are decreasing at an even faster rate.

Supply Data: Inventories Too Large
Permits, Starts, and Completions, (PDF): Permits declined 23.9%, Starts by 26.9% and Completions by 21.7% when compared with June, 2007. This data from The Census Department did little to boost builder confidence.

Single family homes are the most leading of indicators. When these are extracted, we see declines of 39.7% from June, 2007, and 62.0% from the peak in January, 2005. No region of the country departs significantly from this pattern, and the numbers represent the lowest levels since 1991.

On a final note, if any readers were under the impression that housing starts had increased, then please note this widely reported discrepancy in the numbers by way of The Wall Street Journal or Business Week.

New Home Inventories, (PDF): 426,000 new homes are for sale, which represents a 10 month supply. The raw number of homes in this category has been dropping. This is not surprising after more than a year declines in permits, starts, etc, on the order of 25% to almost 50%. It would be nice however, to see inventories move closer to a 6 months' supply.

Existing Home Inventories: Disappointingly, this segment, representing about 85% of total home sales increased to an 11.1 months' supply. During 2005 and 2006, existing home inventories stood at 4.5 months' and 6.5 months' supply respectively.

Demand Indexes: New Lows
New Home Sales, (PDF): 33.2% less than June of 2007. Calculated Risk does a good job of putting the picture for new homes into perspective.

The raw number of homes for sale is falling "pretty quickly" now, but sales remain as the worst June since 1991, a benchmark for previous real estate cycles. Interest Rate Roundup offers more on the meaning of it all.

In the South, new home sales declined by 33.4%

Existing Home Sales: 15.5% less than June, 2007, recent months have all been in this range when compared to the same month of the previous year. Prices fell 6.1%, again in line with recent reports, $215K vs. $229K.

In all, the existing homes data represents "the cycle high in inventory overhang, and the cycle low in sales and prices", not good news. We wrote back in March about how foreclosures might represent significant new source of pent up supply in this sector.

The Big Picture, Calculated Risk, and Paper Economy all mention this phenomenon with respect to the June data on existing homes.

Forward Looking Indicators
The raw number of homes for sale has been declining. However, the rate of sales has been declining at a greater rate, so that in terms of "months' supply", inventories effectively rise.

Any gains from that will probably be outweighed by the following and finding any news to signify a bottom will occur in Q3 2008 is difficult.
*Loan delinquencies quadruple from 2005, (Wall Street Journal), meaning the risk of more foreclosures becoming more inventory.
*Foreclosures, Q2, 2008, were 121% above Q2, 2007. This is almost 6 times the rate of Q2, 2005 meaning more inventory of unsold homes.
*More inventory will increase downward pressure on prices.

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Black Bear Realty Website
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