Existing Home Sales Plummet In August

You can always count on the NAR to present their usual propaganda regarding the housing market. Case in point the NAR's press release which proclaimed "Existing-Home Sales Move Up in August." The way the NAR came up with this misleading number is by comparing existing home sales in August with July's number. What should have been done is to compare August 2010's number to August 2009 to get a real indication of existing home sales. Why? Because the housing market is very seasonal and fluctuates quite a bit month to month.  From the NAR:

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 percent to a seasonally adjusted annual rate of 4.13 million in August from an upwardly revised 3.84 million in July, but remain 19.0 percent below the 5.10 million-unit pace in August 2009.

Total housing inventory at the end of August slipped 0.6 percent to 3.98 million existing homes available for sale, which represents an 11.6-month supply at the current sales pace, down from a 12.5-month supply in July

You can see why the NAR did not use year over year numbers in its headline. It is pretty depressing to report existing home sales falling 19% year over year. The big problem in the housing market remains high levels of inventory. We are currently at 11.6 months of supply while the historical average is between 4-7 months supply.

Black Swan Insights

Existing Home Sales Plummet In August