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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Aug. Existing Home Sales Drop Unexpectedly

Sales of existing homes dropped 2.7 percent in August compared with July, the National Association of Realtors said moments ago, well missing expectations.

Forecasters expected existing home sales to rise 2 percent in August.

The markets responded by turning negative, after a bump up following this morning's better-than-expected unemployment news.

Still, the August sales figure -- a 5.1 million sales-per-year annual rate -- was up 3.4 percent compared with August of last year.

Seventy percent of the August sales came from houses selling for less than $250,000 which tells you two things: a) home prices continue to drop dramatically and b) no one's buying expensive houses.

Unsurprisingly, sales of foreclosures and other distressed properties made up 31 percent of all August sales, as people search for bargains.

The August sales figures were helped by the low mortgage interest rates and the $8,000 first-time home buyer credit, which expires at the end of November. First-timers made up 30 percent of all August sales.

The median home price of an August sale was $177,700, 12.5 percent lower than August of last year. Though the number continues to drop, it was the smallest year-over-year decline in home prices in 10 months.

If there was any good news in this report, it's that inventories -- the overhang of unsold homes -- fell to an 8.5-month supply. During the worst of this housing crisis, the inventory number was up near 12 months. A healthy housing market carries about a six-month inventory figure.

-- Frank Ahrens
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By Frank Ahrens  |  September 24, 2009; 10:35 AM ET
Categories:  The Ticker  | Tags: National Association of Realtors, home sales  
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Comments

Exactlly what is unexpected? Have you been to the bank to try to get a loan for the purchase of anything lately?

The feds gave the money to the banks, the banks are sitting on it, re-creating the conditions of the great depression when the federal government pursued what it thought was a deflationary monetary policy and sat on the money itself.

Posted by: youmustbejoking1 | September 24, 2009 11:05 AM | Report abuse

We still got turbulent fluctuations in the Bushed Recession, so it's still too early to see a more general trend of improvement in any economic indicator.

Posted by: TalkingHead1 | September 24, 2009 11:07 AM | Report abuse

I am not surprised that the WaPo is burying this story in small print.

What happened to the "green shoots"? Housing is still down, there is no rebound, and the houses that are selling the prices are below $250,000.

Mr President stop wasting time and concentrate on helping the economy rebound.

Posted by: jdcw | September 24, 2009 11:07 AM | Report abuse

'Unexpected' to who?

The MORONS in Congress and Analysts?

Posted by: cavatellie | September 24, 2009 11:24 AM | Report abuse

The surprise here is that the analysts and media have been looking at the data from a less-than-useful perspective. On a month-to-month basis, housing sales historically climb steadily from February onward, peak in June or July, then begin declining for the remainder of the year. The real news in the August data is actually good news, which is that sales were 5 percent higher than August 2008.

Posted by: jdnathan | September 24, 2009 11:42 AM | Report abuse

I was in the market in August trying to take advantage of the $8000 federal tax credit and was in the NSP program in Prince George County. The pickings were slim and 95% of what I saw needed too much work and turned out to be not worth it. You pay $180K to $200K for a foreclosure then have to add on a renovation loan at a higher interest rate. For a 1st time homebuyer making $50K/year it just wasn't worth it. Rooms were small, houses were old, renovation needed inside as well as out. I may try again if they extended the $8000 credit. Otherwise I could probably have a small house with decent size rooms built for $250K.

Posted by: keedrow | September 24, 2009 12:32 PM | Report abuse

The problem for a recovery of the housing market is based on the way appraisal are still done. The market value of any house is based on sales in the area. Since most of the sales are foreclosures there is not a true valuation of the houses for sale or refinance. the govt needs to tell the banks to change how they do business by either eliminating foreclosures from the appraisal evaluations or maybe by going back to former valuations when the houses were pruchaesed. That would do more to promote sales and the eventual recoveruys. Now i order to buy you must take money to closing to make up the difference between the loan value and the sales value.

Posted by: Fonz | September 24, 2009 1:44 PM | Report abuse

So, housing prices continue to drop like a boulder. How is this a bad thing? It's great!

Posted by: forgetthis | September 24, 2009 2:03 PM | Report abuse

"So, housing prices continue to drop like a boulder. How is this a bad thing? It's great!"

There's nothing great about that, as result of recession. For the vast majority of people, too much drop or too much rise in the price of essential like food or housing leads to recession or inflation that hurts the economy and them.

Posted by: TalkingHead1 | September 24, 2009 2:44 PM | Report abuse

The feds gave the money to the banks, the banks are sitting on it, re-creating the conditions of the great depression when the federal government pursued what it thought was a deflationary monetary policy and sat on the money itself.

Posted by: youmustbejoking1 | September 24, 2009 11:05 AM
------------------------------

This is partly the case, and partly not. Many of the largest banks simply redeposited the money that the Fed gave them with the Fed, which was essentially a shell game to allow the banks to appear more solvent than they are. Fed member banks created money for themselves, and because they have a lot deposited with the Fed now, their debts don't look as insurmountable.

However, a lot of the liquidity injected into the markets did end up getting loaned out, but individuals and businesses were fairly skittish about taking the cheap loans. Instead, a lot of the money was borrowed by hedge funds and investment firms who have used it to fuel the current stock market rally, largely trading in the stocks of Fannie, Freddie, and a few megabanks. The cheap money has created a new Wall Street bubble and not a true recovery. Is anyone surprised?

Posted by: blert | September 24, 2009 3:05 PM | Report abuse

Falling home prices isn't just 'great' or 'not great'--it's great for some, terrible for others. But one thing's for sure: it's a correction of what we had going on in 2005--when homes were selling at unsustainable prices.

Posted by: gmcfar | September 24, 2009 3:31 PM | Report abuse

$8,000 means something when you're buying a $100k condo. It don't mean nothin' when you're buying a $500k SFH.

Posted by: member8 | September 24, 2009 4:57 PM | Report abuse

Why must the sole criteria for "good housing news" be rising prices? The deflation of over priced homes is a good and natural economic event.

And for those who are on the sidelines it is excellent news.

Posted by: mewcomm | September 24, 2009 5:28 PM | Report abuse

"unexpectedly"?????????

As in like what - The Sun came up "unexpectedly" this morning.

The sooner you folks take your lips off Obozzo's azzz the sooner you'll be free to investigate more than today's talking points from the white House.

Posted by: Bcamp55 | September 24, 2009 5:34 PM | Report abuse

What idiotic Washington analysts can't do is math. The average salary is 50K. Three times is 150K. Some have higher, but many have lower. And you CAN'T count on DC-Wall Street to let you keep even a wage-diminishing job with no pension. So, what the HECK does DC expect? 177K is enough.

I know. You have a great job in your urban center and NO ONE can find a house for that price. EVERYONE has to have a two income family and it's all George Bush's fault.

No, it's the people's fault who let home prices skyrocket in bidding wars, who overextended themselves, and who sold them "innovative financing."

That is, DC and NY and LA types.


The same ones "shocked" that EVERYONE is not buying 500k homes.

They have the brains of a teenage who swears EVERYONE is driving a Mercedes 500 with an Iphone, designer clothes, and DVD/navigation.

The kids of the DC lobbyists and NY stock market types are. Because they are like Daddy and Mommy- CROOKS.

Posted by: georgieporgie2 | September 24, 2009 5:36 PM | Report abuse

The government must immediately drop everything it's doing and and run to the rescue of housing and the realtors -- it is more important than the space mission.

We must double the $8k tax credit or even make it 3 or 4 times, make it $16k so that people can jump into a debt hole that is $400k deep ... at a time when they can lose their job any second.

Posted by: free_np | September 24, 2009 5:39 PM | Report abuse

The White House keeps saying the stimulus is working. I don't get it? Why isnt' the housing market moving?

Posted by: 45upnorth | September 24, 2009 6:35 PM | Report abuse

The comments to this entry are closed.

 
 
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