On the heels of an unexpected decline in new home sales yesterday, comes news of an unexpected decline in existing home sales today.
The Econoday consensus estimate for existing home sales was 5.565 million at a seasonally adjusted annualized rate up from a reported 5.520 million in June.
Instead, existing home sales fell 1.3% from a downward revision to 5.510 million in June, a 2017 Sales Low according to Mortgage News Daily.
Sales of existing homes, like those for newly constructed ones, performed poorly in July. The National Association of Realtors® (NAR) said today that those sales of existing single-family houses, townhouses, condos, and cooperative apartments slipped 1.3 percent from their June level to a seasonally adjusted annual rate of 5.44 million units, the lowest sales rate thus far in 2017. In addition, June sales, originally reported at 5.520 million, a decline of 1.8 percent from May, were revised down to 5.510 million. Despite the declines, sales in July were still running 2.1 percent ahead of last year.
Analysts had expected sales to increase, largely because of an uptick in the June pending sales report. Results, however, were at the low end of their projections, which ranged from 5.410 to 5.650 million. The consensus among those polled by Econoday was 5.565 million.
Lawrence Yun, NAR chief economist, says the second half of the year got off on a somewhat sour note as existing sales in July inched backward. “Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” he said. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.”
The median existing-home price for all housing types was $258,300, up 6.2 percent from $243,200 in July 2016. July’s price increase marks the 65th straight month of year-over-year gains. The median existing single-family home price rose 6.3 percent to $260,600 and the median existing condo price was $239,800, a 5.3 percent annual increase.
“Home prices are still rising above incomes and way too fast in many markets,” said Yun. “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”
Total housing inventory at the end of July another declined 1.0 percent to 1.92 million existing homes available for sale, and is now 9.0 percent lower than a year ago when the inventory stood at 2.11 million. The number of available homes for sale has fallen year-over-year for 26 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, down from 4.8 months a year ago.
Existing Home Sales
Volatility adds a lot of news to year-over-year reports. Sales are up 2.1% from a year ago because July 2016 was even weaker. August provides and easy to beat target as well.
September will provide a hard to beat number and year-over-year sales are likely to be negative.
Existing Jome Sales Supply
Supply numbers are not seasonally adjusted. That explains the pattern shown above.
Existing home sales numbers are still trending higher, but the market is very weak. Fred data does not go back far enough to show.
Data is available for new homes.
New Home Sales 1963 to Present
People cannot afford the prices asked. For further discussion, please see New Home Sales Plunge to Lowest Annualized Pace in Three Years.
Mike “Mish” Shedlock
unexpected?
some of us have been expecting exactly this.
chalk-up another losing-is-winning score for the book-cookers & headline spinners.
so you know what is truly “unexpected”? an upward data revision. all data continues to be revised downward after the bogus headline number pumps markets.
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What is really “unexpected”? Honest government statistics or an end to cheerleading by academic or trade association economists….
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“People cannot afford the prices asked.”
…but offers are getting lifted, inventory is shrinking, and prices are going up. Not sure I’d confuse volume of transactions and price.
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Fannie Mae:
WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 1.5 percentage points in July to 86.8, after matching its all-time high in June. The decline can be attributed to decreases in three of the six HPSI components. The net share who reported that now is a good time to buy a home fell 7 percentage points, with the share who say it’s a bad time to buy reaching a new survey high and the share who say it’s a good time to buy reaching a new survey low
…
Nearly half of consumers who say now is a bad time to buy cited rising prices as a primary concern—a survey high.
“It’s clear that high home prices are a growing challenge helping to send buying sentiment to a record low,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
http://www.fanniemae.com/portal/media/corporate-news/2017/july-home-purchase-sentiment-index-6586.html
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I don’t get your point. In ’08 I would have cited falling prices as reason it’s a bad time to buy.
Now if the index was at all time highs, I’d be worried.
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Backstopping Mish’s point … nothing more.
As for index at all time high … you must have missed blurb above. Prior month:
WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 2.1 percentage points in June to 88.3, matching the all-time high from February of this year.
http://www.fanniemae.com/portal/media/corporate-news/2017/june-home-purchase-sentiment-index-6577.html
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Yep, missed that part. That would bother me more. Low sales numbers… not too much.
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“Low sales numbers… not too much.”
…
Why not? Is it different THIS time?
If you followed the collapse closely last go round, the few forecasters (Bill McBride for one) who accurately predicted the downfall spoke of “sticky prices” as preamble.
Prices stay high —–> volume dries up —–> price cuts commence —-> new SOLD prices used for comparatives (“comps”) ——> house values fall (housing priced at the margins) —–> vicious cycle commences.
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1- less important to me… seems volume could be low from lack of inventory.
2- more important to me. I have seen price move significantly, many times, in many different products, in both directions, without any real volume. So although some people like volume as a confirmation, and it is often nice to have that confirmation, for me its just not essential. Look at late ’15 sales, or look at yr ago sales. shite and shite but prices went up. Prefer to just pay attention to price. Call it old habit.
Right now prices are still going up, so therefore I expect them to continue going up until they no longer go up and start going down. When I see a down print yr/yr then I’ll be willing to consider changing my mind. going against 65 straight up months to pick a top, to me, is like tryin to catch a fallin knife in reverse.
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oh.. and it’s never different THIS time, nor is it ever exactly the same (the later being true would make things too easy).
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“Existing home sales numbers are still trending higher, but the market is very weak.”
…
Well, what the housing market needs – obviously – is
“No money down.”
http://www.ocregister.com/2017/08/21/no-money-down-mortgages-credit-union-welcomes-them-back/
Uh, just someone please tell me it will be different THIS time …
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Waiting for the “unexpected” bailouts that are practically a sure thing…
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difference is relative as in same $#!+, different day
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Could unaffordable property taxes be a factor in declining new home sales?
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In places like Illinois and NJ, most definitely…Last I heard, there wasn’t much building of new homes in IL…
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You have to understand the runup in car and home sales to dot.com bubble v2.0
I know of people who bought new cars and then worked for Lyft or Uber in order to afford the payment.
For new homes, a friend rented a condo for an ‘investor’ who bought it as an AirBNB rental.
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i don’t know about anywhere else, but in my small town supply is drying up and even hard to sell areas have a supply problem. Price is not neccesarily rising fast but steadily. From what i can tell, there are no houses in the mid to lower range available. No one i know is building these types of homes. All the construction is upper range custom homes. A few years ago, there were dozens of smaller lower priced homes, however all of these have been flipped or bought outright and now there is next to nothing left. Just an observation from a small town(s) in Northern Arizona.
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I’m tired of the narrative that there is a “lack of inventory” or a “shortage of listings”. The inventory is there, it’s just priced too high.
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There’s a house flipping seminar being advertised on the radio in my ville. Right on time. Maybe the hurricane will reduce inventory.
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The evidence of a top in real estate is a peak in the winter and a steady decline through the house buying season. While inventory is historically low, it is just right for a declining market.
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How many part time Amazon jobs does it take to afford a $200K house — assuming one can find such a house listed?
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THESE STATISTICS WILL APPEAR IN MY NEXT POSTING. FINANCIALISATION = STRANGULATION. “Housing peaked in the USA at 2.5 million units in the 1970s falling to 1.1 million today. Adjusted for floor space which has increased that goes up to 1.25 million equivalents or just half the quantity produced 40 years earlier when the population was 105 million less. Per head of population the US built 1.15 homes per 100 citizens then compared to only 0.39 homes now, or more graphically it is only building one home today for the three it built in the 1970s per head of population, and most of today’s homes, given the rise in floor space, have been built for the rich or their speculators.
The same thing has happened in the UK only worse. Here the data goes back further. As in the case of the US fewer than half the homes are being built today compared to the 1930s, but they are only 52% as big, and they are being built for a population that is 40% larger. Hence adjusted for these factors per head of population, only about one house is being built for the five to six that were built in the 1930s, especially 1936 as measured by square foot. The result in both countries is that housing has become unaffordable for the bottom 80% of society who do not already own or will not inherit a home.
In other short if you want to financialise housing, limit the supply, thereby driving up prices and with it leverage.
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