by Calculated Risk on 1/24/2008 10:00:00 AM

The NAR reports that Existing Home sales were at 4.89 million (SAAR) unit rate in December.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 2.2 percent to a seasonally adjusted annual rate1 of 4.89 million units in December from a pace of 5.00 million in November, and are 22.0 percent below the 6.27 million-unit level in December 2006.

For all of 2007 there were 5,652,000 existing-home sales, the fifth highest year on record; however, the total was 12.8 percent below the 6,478,000 transactions recorded in 2006.

Click on graph for larger image.

The first graph shows the Not Seasonally Adjusted (NSA) sales per month for the last 3 years.

The impact of the credit crunch, starting in September, is obvious as sales declined sharply compared to the same month in 2006.

For existing homes, sales are reported at the close of escrow. So December sales were for contracts signed in October and November.

The second graph shows nationwide inventory for existing homes. According to NAR, inventory was down slightly at 3.905 million homes for sale in December.

Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in November. “The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets,” Yun said.

The typical pattern is for inventory to decline about 13% in December, so this decline was less than normal. This is the highest December inventory level in history.


The third graph shows the 'months of supply' metric for the last six years.

Months of supply declined to 9.6 months. This is the highest year end months of supply since 1982 (the all time record of 11.5 months of supply).

Even if inventory levels stabilize, the months of supply could continue to rise - and possibly rise significantly - if sales continue to decline.

The fourth graph shows monthly sales (SAAR) since 1993.

This shows sales have now fallen to the level of July 2000.

More later today on existing home sales.