In a piece laden with doom and gloom (eg, “the economy is seen as much weaker, restrained by the dead weight of housing“), and looks like it was written before the actual data came out, the WSJ reported the most recent housing numbers. We’ve omitted all the editorializing for the sake of clarity:

Home resales rose to a 5.00 million annual rate, up 0.4% from October’s 4.98 million annual pace, the National Association of Realtors said Monday…Inventories of homes fell 3.6% at the end of November to 4.27 million available for sale, reflecting a 10.3-month supply at the current sales pace…The median price of a previously owned home fell 3.3% to $210,200 in November from $217,300 in November 2006.

Obviously the housing market is not in good shape, but these numbers do not look too bad, given that context. We tried to get a little perspective on the numbers, but it is very hard to find all the information in one place. Upon investigation, it turns out that the Federal Housing Finance Board is charged with keeping the median price information, but they don’t seem to do a particularly good job of making that information easily accessible and useful. Here is the link to the detailed data.

“The median price of a previously owned home fell 3.3% to $210,200 in November from $217,300 in November 2006,” say the WSJ piece. Those figures from the NAR do not appear to agree with the government figures, which are a little higher, but they are close enough to give us a little perspective. Existing home prices for the last 15 years up to 2006 have gone up around 4% per year, according to the government’s monthly data. So a 3.3% decline in 2007 does not appear to be that big a deal.

New home sales are another matter entirely. That’s where the party was. And here too the relevant government data are hard to analyze because they are buried. The government website we visited gives “previously occupied” home data and “all homes” but not the missing link between the two — i.e., new home sales prices. That’s where the charts get truly scary, where prices were perhaps 50% higher than they should have been. That affects a non-trivial but small portion of Americans.

Of the 75 million homeowners in the US, about 10% of them may have purchased in the last five years. The government data indicate that those burdened with the craziest home prices are concentrated in areas like parts of California, south Florida, DC and its suburbs, and a few other areas. Many of these people would appear to have a serious valuation problem that will likely take most of a decade to resolve. That would appear to be a significant issue, but less than the “dead weight” described by the WSJ.

What to make of all this? One tentative conclusion is that the measurement used by the government and the NAR — median prices of previously owned homes — is actually a pretty good barometer of the state of housing. Because it is a “median” it is not that much influenced by the crazy prices of the last few years in certain regions of the US. A 3.3% decline in the median price for an existing home would appear to be a manageable number. A second conclusion might be that the hangover to be endured by that smallish portion of Americans who attended the party of the century is not going away anytime soon.

This entry was posted on Monday, December 31st, 2007 at 1:46 pm and is filed under Democrats, General, Republicans, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.