October Existing Home Sales Fall More than Expected - Inventory at 22 Year High - Record Median Home Price Drop of -5.1% YoY

Existing home sales fell to an eight year low, declining a further -1.2% MoM (consensus -.8%) in October, and a cumulative -20.7% YoY. In October, single-family home sales were unchanged from the prior month while condo sales fell -9.1% MoM. So all of last months decline was in condo/coop sales. Over the last year, both single-family and condos have seen declines of just over 20%. September's existing home sales decline was revised to be slightly larger than originally reported at -8.2% MoM versus the originally reported decrease of -8% MoM.

The supply of existing homes for sale rose to 10.8 months, with single-family at 10.5 months and condos at 13.1 months, based on the current sales pace. The 10.5 months of home supply is the highest since 1985. The actual number of homes for sale rose 1.9% MoM, but remains below the peak level of last July.

The median home price for existing homes declined by the most on record in October to $207k, down -5.1% YoY. This compares with the -4.9% YoY decline in home prices for the Case-Shiller 20-city index released yesterday, with data through September. Average sales prices fell -3.4% YoY based on today's data. For both median and average prices, the declines in value have been solely focused on single-family structures (median price down -6.3% YoY) while condos continue to rise (median price up +4.9% YoY). The previous record decline in median home prices was -4.3% YoY in October 2006, a year ago exactly.

Purchases fell -4.4% in the West and -1.7% in the Midwest, and were unchanged in both the South and Northeast in October. In September, sales fell in all four regions, with the Midwest falling the least at -6.3% MoM, and the West and Northeast both declining around -10% MoM.

Goldman Sachs estimates that existing home sales could fall from today's 4.97M annual pace to as low as 4M annually by the end of 2008, as the housing market continues to deteriorate. Remember that the October existing home figures represent pending home sales from August and September, when the credit crunch was tightening. Most dealers are looking for home prices to continue declining through 2008, to reach a cumulative decline of -15% in home price values nationally. The excess inventory of existing homes may remain on the market longer than usual, because of the greater percentage of homes owned by speculators. Owner-occupiers are more likely to remove their homes from inventory when sales soften.