Get Blog Updates on your iGoogle homepage:
| Existing Home Inventories Weigh on Market |
| Written by Jonathan Smoke | |
| 08.27.2007 | |
|
Discuss this article on the forums. (0 posts) The National Association of Realtors (NAR) released its data today on July existing home sales. As expected, July sales declined relative to July last year and sales declined slightly since June. For a review of the report, see “Resale home inventory soars to 9.6 months” currently in our Real Estate news. When we combine this report to last week’s reported July new home sales and inventory figures, we can clearly see that although some progress is being made with levels of new home inventories, existing home inventories are climbing. Combined with a slow sales pace that is continuing to decline, the months’ supply of homes for sale is getting worse. )) As seen in the chart above, the months’ supply of new homes is typically less than the months’ supply of existing homes, but a large gap between the two has been created in 2007, and it’s getting wider. As evidenced by permits and starts having fallen significantly since 2006, builders are trying to control inventory. Unlike builders, sellers of existing homes may not have a choice regarding adding to inventory. Indeed, as foreclosures have increased, inventories of existing homes are growing. The gap is not likely to become significantly wider than it is today, as existing homes are a substitute for new homes. As long as the months’ supply of existing homes is high, not much headway can be made on the new home supply barring an even more extreme pullback in permits and starts. But, as I try to always point out, where this really matters is in the local market and indeed in the submarkets and neighborhoods where consumers make their housing choices. If equivalent quality existing homes are readily available, new home sales will suffer. If inventories are in check or if new homes offer something existing homes can’t for a price a well-represented customer segment can afford, new home sales will do fine. 
We're always looking for feedback from our readers.
|
| < Prev | Next > |
|---|
