Over the past couple of weeks I've read several healines that say something to the effect of "Resale Home Sales Decline By The Largest Amount In 16 Years". Now keep in mind that this is a summarization of several article headlines that I've seen recently, so I'm not sure that there is an article headline that reads exactly that way. However, I can still make my point. That point being that when these statistics are posted, they do a fairly bad job at putting them into perspective. If they did, they wouldn't be nearly as attention grabbing, and what would an article be if it didn't grab attention. The perspective that I'd like to offer is that when they describe 2006 as the worst year in 16 years for home sales, they fail to make the point that they are comparing 2006 to a year that set records in almost every category, 2005. So with this year undoubtedly being a rebound/slump/correction year it should compare very poorly to the previous year as would any normal year (and by normal I mean not '04 or '05). Now if we compare 2006 to what could be sconsidered to be a fairly normal year (as far as activity is concerned) like 2003, we will not see the huge decline in sales numbers. As a matter of fact here's the comparison (all data is derived from ARMLS as of 1/29/07): 2003 - 79,493 total residential sales, Avg Days on Market=65; 2006 - 74,108 total residential sales, Avg Days on Market=71. Comparing these two years, of which 2003 was considered to be a very good healthy market, there was only a decrease of 7% in total sales and 6 more days on the market on average. This picture doesn't look so bad.
So when you see the articles discussing the sales number from 2006 being one of the biggest declines in decades, keep in mind that although the real estate market in 2006 struggled for a long list of reasons, it's not quite as bad as the sensational journalists would like us to believe.