September Existing Home Sales

September’s report on existing home sales from the National Association of Realtors reversed the brief spurt of positive data seen in the prior month.  As we had warned at the time of August’s release, this should come as no surprise if you subscribe to one of Atlas’s leading tenets that America is still in the early innings of what we believe will be a prolonged period of debt destruction and reliquification.

Sales of existing homes contracted by three percent in the month to an annual pace of 4,91 million homes.  The drop came from the single-family component which contracted 3.6 percent, swamping the 1.8 percent increase seen in condo sales.  Supply grew a smidgen to 8.5 months while the average price fell a whopping 3.1% to $212,700.  The median price, at an even lower $165,400, was off 3.4 percent.

Our projection that we are experiencing what will become a long-lived period of debt reduction has two significant components.  First, both individuals and businesses will become more frugal, paying off existing debt and delaying (or defraying) any further borrowing.  Second, some debt destruction will be forced upon the borrower through processes such as bankruptcy and foreclosure.  Unfortunately, the increasing supply of existing homes coming on to the market is being bloated to some extent by the latter as foreclosures continue to cast a gloomy pall over the market.