While housing statistics for April 2012 were largely positive, we have not seen a real pickup in activity in terms of sales volume for more than five years. Both the S&P/Case-Shiller sales pair counts and NAR’s existing home sales remain low compared to their pre-recession levels. S&P/Case-Shiller sales pairs data are updated the last Tuesday of each month. The latest data in the chart below are for April 2012, released with the S&P/Case-Shiller Home Price Indices on June 26th.
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 2006 market peak, the 10-City Composite April sales pairs ranged from about 50,000 to 80,000 and the 20-City Composite from about 80,000 to 135,000. Once the market collapsed, we saw the 2008-2012 April transaction volumes fall to about 35,000-40,000 for the 10-City Composite and 65,000-75,000 for the 20-City Composite. April 2012 reported 34,256 sales pairs for the 10-City Composite and 66,657 for the 20-City Composite, about half the pace witnessed between 2004 and 2006.
As seen by the graph below, existing home sales reported by the National Association of Realtors show the same pattern.
Existing home sales rose from about 4.5 million in early 2000 to their late-2005 peak of 6.34 million (these data are seasonally-adjusted at annual rates). Once the market turned, sales volume fell back to a level of about 4.0 million in late 2008. From there, sales rose through 2009, largely due to the homebuyers’ tax credit.
As of May 2012, existing home sales are just above 4.0 million, slightly more than their average of the prior two years. This is about the same rate seen in 1997, and far below what the housing market experienced during its 2000-2006 run-up. Since 1984, however, average existing home sales are only about 4.0 million, about the current pace.
Looking at the graph, existing home sales generally rose from about 1991 through 2005 – that’s 15 consecutive years. So, it is no wonder that there is confusion about the level of sales that is “right” for the economy. So, the question remains: What is the level of existing home sales where most people start to believe the housing market is on the right track?