What struck me as I looked over the October housing market data was how much things had changed in a year.
Between October 2009 and October 2010, home sales were down by 19 percent:
Inventory, while down for the first time this year, was 32 percent higher than it had been a year back:
And months-of-inventory, which compares supply and demand in a single metric, was up by 53 percent from a year prior (and remained above the six-month level):
Over that same time period, housing valuations didn’t improve. In fact, prices were slightly higher in October 2010 than October 2009.
So it is no surprise that prices have drifted downward of late. Nor should we be surprised if they continue to do so in the near future.
My disclaimer is that our Federal Reserve has seen fit to start creating $75 billion out of thin air each month. The possibility that some of that money could eventually find its way into the housing market renders the task of fundamental-based forecasting even murkier than usual. But for now, the evidence points to a continuing sideways-to-down drift in home prices.
Update: This post has been updated with the correct amount of money the Federal Reserve was putting into the economy.
Please contact Rich Toscano at rtoscano@pcasd.com and follow him on Twitter at http://twitter.com/richtoscano.