Buyers: Are they their OWN WORST ENEMY?

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Woo Hoo… the August Existing Home Sales report was released Wednesday, showing a decline in the number of homes sold nationwide, and a reduction in the median sales price.

LEAVE IT TO THE MEDIA:

I can’t say that I am surprised, though, the mainstream media… playing on their love for the “sensational” spun these statistics as a big negative.

Are they driving an agenda, or do they simply NOT GET IT?

Sure… the slow down in home sales wasn’t a good thing, but it wasn’t terrible, either — sales were actually up in half of the regions around the country.

And, if I can get on my soapbox for a sec… citing “median sales price” is somewhat pointless because median sales price only measures the price point at which half the homes sold for more, and half sold for less. Woopie!

What does matter [I am glad you asked] =0) The third statistic in the report is what deserves as much — maybe more — attention that the others.

According to yesterday’s press release, the national home supply is decreasing.

This is sweet news for those selling their homes… even those selling Orlando Real Estate.

In this report, the National Association of REALTORS [NAR] said that the country’s existing supply of homes for sale fell by 7 percent in August.

At the current pace of sales, that represents a 10.4-month supply, which is down .5 down from July. I don’t have my mortgage calculator handy, but I think that is 5%, is it not?

The POINT: A reduced supply of homes for sale, everything else remaining equal, home prices go up!

This is Supply and Demand in its purest form.

The one thing that is seems economists and experts can agree on, is that reducing the housing supply is one of the most important elements to a sustainable housing recovery. And let there be no doubt… we have seen several indications that this is happening, like…uh… builders not building as much.

Bottom Line:

This is refereshing news for home sellers because a reduction in housing supply tends to lead to higher prices.

(Images courtesy: The Wall Street Journal Online)