Friday, November 5, 2010

Looking like a long winter for home sellers

The latest pending sales for October came out today. Unfortunately, not in the direction one would hope for: falling 1.8% on a monthly basis and 24.9% down from October 2009.

Looking past the foreclosure mess that came roaring into view last month, most housing activity showed slight growth from the summer's dismal readings. While sales have shown a modest uptick from August, inventory continues to be the weight keeping prices low and buyers on the fence.

Locally, September's monthly sales were down 30% on a year over year basis. Inventory increased by 8% from September, and the inventory to sales ratio was still elevated at 11.5 months.

Regarding existing home sales, the faint glimmer of light was an increase in sales price - but that is attributable mainly to fewer foreclosures and first time buyers as a percentage of overall sales (so, no, sellers - don't get the idea that this means you can raise your asking price).

(See local Cincy MLS-based charts here)

On a national level, the existing home sales drop year over year wasn't quite as sharp, but still high with a 19.2% decrease (seasonally adjusted). One positive sign was in new home sales, rising 6.6% to a seasonally adjusted rate of 307,000 units annually. Not exactly boom times, but moving in a positive direction.

At this stage of any nascent housing recovery, it is hard to see what will inspire potential home buyers back in the market. Low mortgage rates don't seem to be doing the trick. It may be that any real growth will have to wait until unemployment rates have shown a steady decline and the fear of declining house prices has passed.

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