The weather isn’t the only thing getting chillier as we move into the fall season. Yesterday, the National Association of Realtors reported that existing-home sales fell 4.3% in August from July to a rate of 5.5 million, and according to the S&P/Case-Shiller home-price index (also announced yesterday), home prices in July fell 3.9% from a year earlier. Even worse: the NAR said total inventories of unsold homes rose 0.4% in August to 4.58 million. That’s equal to a 10-month supply and the highest in 18 years.
The rate of home sales isn’t so scary; it matches that of pre-boom levels. “Like new homes, if we just erase from our memory the period of 2002-2006, the current sales volume seems tolerable if not ‘normal,’” writes Jonathan Smoke on his always insightful “Housing Intelligence” blog. The really big problem is the rising inventory level. “Inventories are the concern and the albatross that does not bode well for a positive 2008,” Smoke says.
Check out a chart comparing home sales and inventories here at Smoke’s blog.