The resolve of the nascent US housing market recovery is about to be put to the test.

Existing home sales slipped in August, breaking a string of four straight months of rising sales. Purchases fell 2.7% in August from the month before, which was below analysis expectations, according to Bloomberg,

One kernel of good news was that the inventory of unsold homes gapped down 11% to 8.5 months of supply, the lowest level since April 2007. In addition to the brisk summer buying season, this figure also reflects banks’ reticence to list REO properties on the market, which is keeping inventories lean. Housing experts generally agree that 7 months of supply represents a stable market.

As autumn rolls on and gives way to winter, home buying typically dries up. During the next few months sales data will be very telling in determining whether this recovery is for real, or just a dead cat bounce on the way to new, painful lows.

Eclipsing even the most optimistic expectations, July existing home sales registered a 2-year high this morning, jumping 7.2% from last month. According to Bloomberg, the National Association of Realtors (or NAR) reported that transactions climbed to a 5.24 million annualized pace, the highest rate since August of 2007.

NAR chief economist Lawrence Yun, the man who asserted the housing market’s slide had stopped back in 2006, is now quite certain the worst is behind us: “We are bouncing back, but we still need to wait until year-end before we see price stabilization.”

While on the surface, this report appears to be filled with nothing but rosy news, there is a kernel of caution amongst the positivity. Despite a jump in sales, inventory levels remained high, at 9.4 months’ supply. In other words, as buyers are coming back into the market, so are sellers.

This is a dynamic we have discussed previously here at Cirios Real Estate, and is a primary reason we are more cautious than most when it comes to this nascent housing market recovery. Even as some markets may stabilize, others will continue to fall until prices return to more sustainable, affordable levels.

Want to know which category your market falls into? Contact Cirios today!

Lies, damn lies and (NAR) statistics.

Indeed.

The National Association of Realtors (or NAR) released data today showing that sales of existing homes crept up in June, the 3rd consecutive up month. While sales were a touch lower than they were a year ago, the annualized, seasonally adjusted sale figure was up 3.6% from May. (For more on seasonal adjustments, please read The Magic of Seasonal Adjustments)

This positive data led many pundits and so-called experts to reiterate calls for a bottom in the broad housing market.  “We have finally bottommed out,” Stuart Hoffman, chief econmist at PNC Financial Services told Bloomberg. Hoffman was referring to sales, not necessarily prices, but conventional widsom says that prices follow volume.

Others, like the popular economics blog Calculated Risk, did some actual analysis of the data and came to a different conclusion about the fundamentals of the market:

“It’s important to note that the NAR says about one-third of these sales were foreclosure resales or short sales. Although these are real transactions, this means activity (ex-distressed sales) is much lower.”

The key takeaway is not whether or not the housing market has “bottomed,” but that markets are still being enormously impacted by government backed foreclosure moratoria, first time buyer tax credits and efforts to keep interest rates low. With unemployment stubbornly high, the true outlook for a housing recovery remains uncertain.

Wondering where your market sits on the path to the bottom? Contact Cirios today and we’ll disect your local market like you wouldn’t believe …

Economic data is inherently backwards looking. Forecasts, estimates and any other prediction of the future is a stab in the dark likely based on an esoteric predictive model and a bunch of educated guesses. And of all the economic phenomena, the hardest of all to predict is the cusp, the turning point.

Nevertheless, despite the cards being stacked against them, bold economists are stepping out on the proverbial limb and saying the housing market is healing and more than three years of declines are running their course. Their analysis is based on looking at history, then some extrapolation of how millions of unique economic actions, geopolitical strife, global financial markets and unpredictable political feuds will play out.

The future, as they say, is yet unwritten.

Consider these two reports, both written in the last 48 hours:

From Bloomberg: Existing Home Sales Hover Near Average. “Sales of existing US homes in March stayed near a four-month average, and prices rose from February, a sign the housing recession has stopped getting worse.”

Now, from Housing Wire: (a great place for housing-related news and analysis) Delinquencies and Defaults Up, Up and Away. “Delinquencies and defaults are on the rise, due mainly to a handful of circumstances, including the backlog from recent foreclosure moratoria, a jump in unemployment and even a slight rise in marital spats. Prime loans 60+ days delinquent increased by 69.6% from November 2008 to January 2009.”

Which data do you think is more predictive of how the housing market will perform in the future?

Existing home sales – transactions that happened 20-50 days ago, meaning contracts were signed back in January or February; or a spike in defaults which will turn into foreclosures, bank owned properties and more homes on the market later this year?

We rest our case.

DO NOT believe the hype: The housing market is still in decline, any stabilization theories are fallacy.

By AUSTIN NELSON

Nationwide home values continue to decline into the New Year.

The National Association of Realtors (NAR) released existing home sales data today for January, indicating an overall 3.1% decline in the median sales price of US homes from the previous month. This drop follows the same national trend we have been seeing since July of last year: Prices have been declining steadily since that time at a rate of 2-5% per month.

The most interesting aspect of today’s numbers is a 5.3% drop in seasonally adjusted, nationwide sales rate. This reverses last month’s numbers, when sales had actually ticked up by 4.4%. Interestingly, the sales rate has seesawed over the past year, showing increases in Feb, May, Jul, Sep and Dec but declining in the other months. Overall, the trend has been down, with an 8.6% decrease since this time last year. The volatility of these numbers could simply be an artifact of an imperfect seasonal adjustment or cycling demand, but the long term trend is clear.

The West region showed no change in its sales rate, continuing its trend as the strongest region in terms of sales activity. In fact, the West has seen a 29% increase in sales since last year, largely due to the fact that the rate was extremely depressed in early 2008. As we have mentioned before, we expect the West to be a leader in buying trends as price declines have been most severe in that area and homes are finally becoming affordable to residents. Continued price declines (median price in the region declined 4.2% last month) will only make homes more affordable as time goes on.

The Northeast region has been the hardest hit of late, posting a 14% decline in rate combined with an 11.2% drop in median prices from December to January. That is a monster drop in a single month. Recent data indicating that New York City’s real estate market is cracking is adding to these drops. But Cirios readers knew about this trend months ago …

This month’s dismal sales numbers are likely closely related to extremely low consumer confidence, as prospective home buyers are holding off on big ticket purchases in the face of the continued and worsening economic decline. Considering that the sales included in these newest numbers were originated in November and December of last year and consumer confidence has dropped significantly since that time, we may be in for further declines in sales rate.

Even if national figures continue to decline, we would encourage readers to look beneath the data. Certain markets are still showing strong increases in activity, even as prices fall. Real estate, still, is local.