The September data on existing home sales was reported as being largely positive, because sales rose by 5.5 percent from August levels. While the increase is a good sign, a closer look at the data suggests that the situation was not quite as portrayed.
Almost all of the September increase was due to a 16.8 percent jump in sales in the West. This increase was associated with a 10.1 percent plunge in the median house price from the July level. Clearly, what is going on is that banks are now dumping real estate in order to get cash. This must happen as part of a clear out of excess inventory, but this is not a jump due to a surge in demand.
By the way, it is worth noting that the condo market is especially glutted right now, with the inventory of unsold condos now equal to 14.3 months of sales.
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