As I announced back in the middle of November, there is going to be a format change beginning this month.  I will be including Absorbtion Rates in the market reports now.  This will give a clearer picture of the direction of the market, as well as help bring a bit of focus to the rest of the numbers.  I’m also going to be stressing the listed/solds percentage to help give a better picture of the market conditions.

I also have corrected number for both September and October.  The preliminary numbers are in for November, but they don’t look right yet, so while I will mention them, I would like to remind you that they aren’t solid numbers.

Let’s start with some of the classic information that I have been including on these reports.

The New listings data shows that new listings for both October and November were up about 2% vs. last year, while September was down about 5%.  I’d really like to see the listings vs. last year drop to the negative numbers, because there is simply too much inventory for the level of buyer activity I see.  However, because the final numbers aren’t in for November, I expect to see a rise in listings… exactly the opposite of what I want to see.

Solds for September were down 43%!!!  Those numbers are holding up to the corrections.  I hope that it isn’t right, but I have to assume now that it is close.  However, the October number rebounded significantly.  Closings were down 18% vs. last year.  That is the best showing (vs. the same month the previous year) since April.  To moderate, though, October 2006 was a particularly crappy month.  November is down by 65%, but I know that those numbers will change in the coming weeks, so we will be revisiting that.  With the exception of the August to September number*, it is easy to see the correlation between pendings and solds from month to month.  If the pattern holds, I expect to see the closed transactions down around 20% for November when all is said and done.

While the preliminary numbers came in for November, both October and September average prices were changed.  Those numbers are (with change from last year): September, $229,428 (-0.8%)  October, $226,820 (+1.5%)  November, $238,548 (+2.3%).  I expect to see the November average drop to be more inline with the other numbers… but I can’t begin to guess where it will fall.

Now, let’s talk about the new numbers.

The uglier number is the percentage of solds vs. new listings.  Let me start by saying that I have been tracking this number since January, 2005.  The highest percentage since then was 85% in December of 2005.  For the last few months, that number has been hanging around the mid 30% range.  This means that one house sells for every three that come on the market.  August through November show the percentage of solds vs. new listings to be 37%, 32%, 32%, and 19%.  The November number is ugly, but I think I will need to revise that to be inline with the other numbers when I see something that is more final.

The Absorption Rate is how long, given the current market conditions, it would take to sell the current market inventory… assuming that there were no more listings added.  This number is used by all types of businesses to gauge market activity vs. inventory levels.  I’m not going to go into the formulas, because I don’t want to tell me competitors everything…  I calculate the numbers for the 12 month average, six month average and three month average.  Comparing the numbers gives an indication of the market heating or cooling.  A balanced market usually has about a six month supply.  Because these numbers are based upon November information, I expect all of them to drop slightly, with the most visible drop to be the three month average.

The 12 month average is 11.3 months of supply.  The six month average slows to a 12.2 month supply of homes, while the three month average shows a 17.3 month supply.  Of course, the three month average is the most volatile, and I expect to see it dropping to around 14 months after the rest of the numbers are in.  That still isn’t good, but it is a bit better.

What that tells me is that the market is still cooling a bit, but it is close to flattening.  It isn’t plummeting.  I don’t have as much depth with these numbers as I do with the other numbers I’ve collected.  My MLS doesn’t offer the historical statistics that I need for this calculation like they do for the other calculations.

I am still looking to see the market turn around in the spring.  Of course, we won’t know it has turned until it has started back up.  The best deals will be had before the turn.  After the turn, investors and other buyers will have already started to bid up properties.

*The August to September pending to closed sale anomaly was a direct result of the Sub-prime Mortgage Meltdown.  Many buyers found themselves unable to close after being approved for loans. After that time, the numbers went back to a more normal percentage of pending sales that followed through to closing.

Thanks, and look forward to my next report during the first week of January.  Happy Holidays.