AUSTIN'S SEPTEMBER 2007 HOUSING STATISTICS: The facts: Sales are down sharply, the number of listings is up and both the average and median sales prices are down. Question: How much of these changes are due to normal seasonal variation? Answer: A lot, but not all, as you'll see when you look below...

The number of sales is down sharply to the lowest September figure in 3 years. While there's an obvious seasonal drop-off in every September of the past 6 years, this is much more severe than any other.

The number of active listings has skyrocketed to an all-time high. It passed 10,000 in May, which should have been an early warning, but who guessed then that sub-prime mortgage problems would get to be such a problem?

Average prices since 2002 show a seasonal drop-off after July or August, so there's no obvious sign of trouble here. However, many contracts below $200,000 fell through in September because of financing problems. Taking those away pushed the average up, so we're getting a picture that's not quite true to the climate of the market.

The months of inventory on hand gives us a little more optimistic picture than the record number of active listings. This chart looks all the way back to 1990, so we see a lot of variation over time for comparison. We were down a 3-month supply of homes last January and we're up to nearly a 5-month supply now. But that's a far cry from the over 7-month supply we had in 2003.

So, this pretty much tells us where we are.... Now the big question: Where are we going? Answer: We haven't seen any kind of break or reversal in these trends, so we can expect them to continue in this direction for an uncertain length of time. One clue to what we're headed for is the number of listings, which has been climbing at a rapid rate and appears to have slowed down. The monthly dots on that chart are coming closer together, which probably means we're approaching a maximum number of listings. More listings means more property on the market, which means more properties to be absorbed at a slower rate. The sooner the number of listings peaks out, the sooner we'll be back to a more normal market.

The most important questions right now are these:
1. How soon will more money flow into the mortgage market?
2. How strict will new lending criteria be after things settle down?