Buying & Selling: The Rise & Fall (And Rise) Of Home Sales

By now it's a familiar pattern, replayed for months throughout the housing slump's continuing decline:

First, higher interest rates cause a slackening of loan applications and refinancings:

Demand for home purchase loans also weakened as the MBA's seasonally adjusted purchase index , widely considered a timely gauge of U.S. home sales, fell 10.6 percent to 390.2, its lowest since late October. The index was also below its year-ago level of 432.9...Also driving demand lower last week was a 18.5 percent fall in the MBA's seasonally adjusted index of refinancing applications to 1,604.6, its lowest since early September. A year earlier the index stood at 1,259.1.

Then you have sellers giving in to the inevitable and cutting prices which leads--surprise, surprise--to slight surges in home sales:

The National Association of Realtors reported that sales of previously owned homes rose 0.6 percent in November to a seasonally adjusted annual rate of 6.28 million units. That followed a 0.5 percent sales increase in October and marked the first back-to-back sales gains since the spring of 2005.

Keep in mind, however, that these gains are from existing homes. New home construction is still on the downslope, and excess condo inventory will keep those units standing alone and empty until there are bigger price reductions across the board.

Of course, none of this is stopping the NAR from saying, once again, that now is a great time to buy. And while this statement is much more true than it was, say, a year ago, it's still not true enough. Not yet. But soon....

Posted at December 28, 2006 04:33 PM

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By now it's a familiar pattern, replayed for months throughout the housing slump's continuing decline: First, higher interest rates cause a slackening of loan applications and refinancings: Demand for home purchase loans also weakened as the MBA's seasonally adjusted purchase index , widely considered a timely gauge of U.S. home sales, fell 10.6 percent to 390.2, its lowest since late October. The index was also below its year-ago level of 432.9...Also driving demand lower last week was a 18.5 percent fall in the MBA's seasonally adjusted index of refinancing applications to 1,604.6, its lowest since early September. A year earlier the index stood at 1,259.1. Then you have sellers giving in to the inevitable and cutting prices which leads--surprise, surprise--to slight surges in home sales: The National Association of Realtors reported that sales of previously owned homes rose 0.6 percent in November to a seasonally adjusted annual rate of 6.28 million units. That followed a 0.5 percent sales increase in October and marked the first back-to-back sales gains since the spring of 2005. Keep in mind, however, that these gains are from existing homes. New home construction is still on the downslope, and excess condo inventory will keep those units standing alone and empty until there are bigger price reductions across the board. Of course, none of this is stopping the NAR from saying, once again, that now is a great time to buy. And while this statement is much more true than it was, say, a year ago, it's still not true enough. Not yet. But soon....