The Existing Home Sales Report Foreshadows The End Of The Buyers Market In Real Estate

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Sometimes, you have to look deeper than the headline to get the full story.

As reported by the National Association of REALTORS®, the number of Existing Home Sales fell last month, ending the report's 5-month winning streak.

Some newspapers are calling it a "setback" for housing.  Others are questioning the comeback.

Rest easy, folks.  August happened to be a terrific month for housing -- despite what the press says.

The Existing Home Sales report has 3 parts to it:

• Total sales volume
• Median sales price
• Overall housing supply

Of the three, housing supply is paramount to the long-term strength of the market. The other two are periphery.  It really doesn't matter how many homes are selling, or at what price they're selling.  What's more important is the ratio of home buyers to home sellers.

Not enough buyers and home prices fall.  Too many buyers and home prices rise.  The former led us into the housing doldrums, and now the latter is leading us out.

Between July and August 2009, existing home supply fell by nearly an entire month and, since peaking 9 months ago, supply is down 23%.

Furthermore, the supply of new homes is down, too, off 34 percent on the year.

Housing supply helps us statistically define "Buyers' Market" and "Sellers' Market" and, right now, the Buyers' Market looks like its ending.  If you've encountered a multiple-offer situation, you know exactly what I'm talking about, too.

The combination of low mortgage rates, relatively cheap homes and timely tax credits turned the housing market around this year and there's more gains ahead --  no matter what the papers say.

With home supply keeps falling, a full housing recovery is just around the bend.

(Post licensed by and adapted from Bring the Blog)