Wednesday, September 24, 2008

Existing home sales have stabilized

Existing single-family home sales are way down from their peak, but they haven't dropped at all in the past 11 months. Total home sales (including townhomes and condos) are unchanged from their Dec. '07 level. Meanwhile, prices are falling. This is a healthy development. If sales were still declining that would mean a dearth of buyers even as prices fall. Instead we have plenty of buyers stepping up to buy homes as they become more affordable. And yes, a good percentage of the sales are foreclosed properties, but that doesn't change the fact that the homes are getting sold. It also provides evidence that there is financing available, albeit without the generous terms available a few years ago. Is the whole financial system really as "clogged up" as Bernanke and Paulson would have us believe?

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