August Existing-Home Sales Rise Despite Headwinds

In response to the National Association of Realtors (NAR) August existing home sales data, released here today showing that sales compared to the previous year are up and inventories are down, I issued the following statement:

“Although the year-over-year sales numbers look very positive, the reality is that last year’s August sales numbers were unusually low due to the post-Homebuyer Tax Credit hangover effect, so this year looks higher mainly by comparison only.  We’re still below healthy levels.

We are seeing the foreclosure pipeline starting to open up again, which is good news.  This will help achieve price discovery and equilibrium, which has been a huge problem over the past couple of years.  In fact, the average home sold in a foreclosure proceeding has been delinquent for nearly 600 days, up from 478 days the year prior.  In August, we started to see banks unload foreclosures and arrange short sales at a higher pace.  Homes at risk of foreclosure accounted for 31% of sales in August, up from 29% in July.  And because distressed sales occur at substantial discounts, this explains the median price decrease for August.

Overall, I believe these numbers continue to show that the housing market is now basically at the bottom, and although the August numbers appear positive, I don’t believe they foretell ongoing positive movement in the short- or medium-term.”