Second Homes 411

After 5 years of record setting sales growth, the housing market slows, but homes are still selling at historically high volumes and many markets are still appreciating. Is the sky falling? We think not. It is slowing, but this is what economists call - ‘a reversion to the mean’ - or a return to normal rates of appreciation and sales volumes. Sometimes to revert to a mean or an average rate, figures drop faster and lower than they otherwise would. The sky is not falling, but here’s the news headlines… Enjoy!

CNN Reports: “The pace of new home sales fell to a seven-year low in August, according to a government report Thursday that showed the battered housing and home building markets even weaker than forecasts. New homes sold at an annual pace of 795,000 in August, according to the Census Bureau, down 8 percent from the revised 867,000 sales pace in July. It was the slowest pace of sales since June 2000, as buyers had trouble finding mortgages or selling their existing homes. Economists surveyed by Briefing.com had forecast that sales would fall to a pace of 825,000. The report also showed the median price of a new home fell 7.4 percent from year earlier levels to $225,700 in the month, as prices were pressured by both the problems in mortgage finance and the excess supply of homes on the market.

The inventory of new homes on the market rose to an 8.2 month supply, as the glut of completed homes without a buyer was near a record high, with 180,000 completed homes listed for sale, just off the record high of 182,000 set in May of this year.

The July report wasn’t the only month revised lower by the Census Bureau; it also dropped its sales estimates for May and June, leaving sales 34,000 below the previous estimates.

The decline in sales came even as their was a pickup in sales in the Northeast and Midwest compared to July. But the South, which accounts for nearly half of the nation’s new home sales, saw a nearly 15 percent drop from July levels, while the West saw just over a 20 percent drop. All four regions of the country have sales that are off more than 10 percent from year-earlier levels, as nationwide the pace of sales is down 21.2 percent from a year ago.

This is just the latest sign of trouble for the housing market. On Tuesday, a report from the National Association of Realtors showed the pace of existing home sales dropped in August for the sixth straight month to their lowest level in five years.”