Housing transactions, where are the buyers and sellers?

On the last Tuesday of each month we publish the number of sales pairs used in the calculation of the S&P/Case-Shiller Home Price Indices. Data are collected on sales of individual single-family homes or condos. When a home is resold, months or years later, the new sale price is matched to the first price creating a sales pair.  We use these two data points to measure the differences in home prices between the two transactions in our indices.

The chart below makes it clear that home sales slowed down over the past four years and quite dramatically in July and August 2011 (the rightmost data observation on the blue and red lines) versus those months’ historic past.

S&P/Case-Shiller Home Price Sales Pairs. Sources: S&P Indices and Fiserv.

The seasonal pattern of the housing market can be seen by the volatility of the graph. For both the 10- and 20-City Composites, sales volume peak around August of each year (the high points of each line, each year) and are at their lowest around February (the low points).

From 2000 until the 2007 market peak, the 10-City Composite August sales pairs ranged from about 75,000 to 110,000 and the 20-City Composite from about 115,000 to 185,000. Once the market collapsed, we saw the 2008-2010 August transaction volumes fall to about 55,000 for the 10-City Composite and 95,000 for the 20-City Composite. August 2011 data, released on October 25th, show an even further slow down with only about 44,500 sales pairs counted in the 10-City Composite and 81,000 in the 20-City. As we indicated last month, the further declines in these data are concerning. We have seen similar declines in housing starts and other sales data over the same time period; and all must return to more historic norms before we see stability in the housing market.  Houses are just not selling the way they did over the prior decade, as the appetite for entering this market remains weak.

The posts on this blog are opinions, not advice.
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