A lot of negative news will be reported this period. However, after I report on the downers, I will share some encouraging numbers. All single family housing closed 5,182 units in November. This is down 15% from November 2005 and will be the first three consecutive year-to-year declines since the 4th quarter 1999. Those three periods in 1999 had declines averaging less than 3%, while our last three periods will have an average percentage decline of over 6%.

Single family attached was down 15% and condos and townhomes were down 15.4%. This was the second decline in the last three-quarters for condos and townhomes, while it was the 4th consecutive monthly decline for detached.

Our housing market was very strong from 12/2005 to 6/2006, so in order to see positive year-to-year changes, there definitely needs to be much more demand than we have experienced the past few periods.

The average sale price for single family detached was $257,676 in November. This was an increase of only 1.7% from the same year ago period and for the year the detached market is only up 2.4% from 2005’s average price. If the year-to-year percentage change is 2.6% or less, it will be the lowest year-to-year percentage change since data has been reported, 1994-1995.

Condos and townhomes had an average sale price of $192,901 for November or a 4.2% increase over November 2005. For the year, the average price for condos and townhomes are up 2.9% over 2005.

The two sectors that have slowed the most are new homes and the high-end home market. The months supply for single family detached new construction increased from 11.2 at the end of October to 11.5 at the end of November.

The months supply for condo and townhome new construction increased from 9.7 at the end of October to 10.0 at the end of November.

The months supply for single family detached resales decreased from 7.3 at the end of October to 7.1 at the end of November. The months supply for condo and townhome resales decreased from 9.2 at the end of October to 8.8 at the end of November.

Why the difference from new homes? Lot prices have appreciated 45% from 2003-2006 in Metro Atlanta. This is much greater than the appreciation rate for the resale market and currently resales provide a greater overall value for the consumer than new construction. However, after increased demand for resales and some discounting for new construction we should see demand again increase for new construction.

There is a bright spot at the end of November. Pending sales declined 7.3% in 2005 from the end of October to the end of November. However, they have declined only 2% for the same period in 2006. Those low home prices may be starting to be too attractive?

Interest rates have declined since their high on 6/29/06. If rates can remain low, home prices continue to moderate and employment remains high then we can reverse our recent downturns into positive gains in 2007. I believe rates will remain low, and with low demand home prices will remain flat, so the key will be employment. Housing "bailed" out our dot-com crash and economy after 4/2000. Now we need to have our economy remain strong for a 2007 housing recovery.