The Econoday consensus expected a small increase in existing home sales in August.
Instead, sales decline a substantial 1.7%. The August decline follows a 1.3% decline in July.
Fourth Drop in Five Months
MarketWatch reports Existing Home Sales Fall in August for the Fourth Time in Five Months.
Existing home sales in August dropped for the fourth time in five months as real-estate agents continue to blame a lack of available homes to buy.
The National Association of Realtors said existing home sales fell 1.7% to a seasonally adjusted rate of 5.35 million. Economists polled by MarketWatch expected a 5.44 million pace.
The median existing-home price in August was $253,500, up 5.6%.
Total housing inventory at the end of August declined 2.1% to 1.88 million existing homes available for sale, and is now 6.5% lower than a year ago.
Harvey Impact
The Wall Street Journal reports A sharp drop in sales in Houston, which was racked by Hurricane Harvey, accounted for most of the overall decline.
Existing-home sales fell 1.7% from a month earlier to a seasonally adjusted annual rate of 5.35 million, the National Association of Realtors said Wednesday. Economists surveyed by The Wall Street Journal expected a rate of 5.45 million sales in August.
Sales have risen just 0.2% over the past year.
A sharp drop in home sales in Houston, which was racked by Hurricane Harvey last month, accounted for most of the overall decline in home sales, NAR economist Lawrence Yun said. He estimated overall sales would have been flat from the prior month without the hurricane effects.
Housing Starts Down Again
Yesterday, the Census Bureau New Residential Construction report shows housing starts declined again in August but July starts were revised substantially higher. Still, starts have lost momentum and are only up 1.4% from a year ago.
Weakness in Starts, Existing Home Sales, Autos
Both starts and existing sales show considerable weakness.
With auto sales in a distinct downturn, it’s difficult to find drivers for economic growth.
Mike “Mish” Shedlock
Thanks for this. The new housing chart and comments are really revealing. If housing supply is so low and buyer demand is so great, why are new home starts are only back to to 1960 levels? Something here is very wrong.
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“If housing supply is so low and buyer demand is so great, why are new home starts are only back to to 1960 levels?”
Because people are banned from building homes that they can simultaneously afford, and that are worthy of living in. In order to ensure the leeches can continue to collect unearned usury on the back of the government enforced scarcity resulting.
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You said it!
RE: “Because people are banned from building homes that they can simultaneously afford…”
Remember when builders were continually adding on more and more square footage to new houses – so they could have a bigger profit margin?
When that petered out, builders then started stuffing new houses with all sorts of extra amenities and luxury materials (granite counter-tops sound familiar?) again so they could make bigger profits.
There is too little competition between business (except retail) in this country.
The manufacturers produce products that really serve only the needs of a very, very few consumers. But hey if that strategy fattens their pockets…….
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Getting some Mexicans (or others) to add an additional 800 square feet unit to your duplex, at what passes for “standards” in California, can cost as little as $50K. While adding up to $2 million to your place’s value in San Francisco. That’s what’s called a market incentive to do something about a mismatch between supply and demand for living space.
But, this being Dystopia and all, it’s of course banned.
And, this also being the dumb-age; the ban is even supported by idiots running around with Adam Smith ties and claiming mythical “other people” are against something their favorite Man on TV have told them is good; called “free markets…”
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The economy in the region is continuing to boom despite huge tax hikes.. Sure business owners may face ‘sticker shock’ but never in history has revenue been higher, interest rates lower & credit easier & cheaper for most businesses. Plus they dont mention that whatever they pay for employee health care is fully deductibe for businesses
http://libn.com/2017/01/20/sticker-shock/
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Because there is HUGE LABOR SHORTAGE in the trades especially in the NYC metropolitan & tri state area and in Eastern Massachusetts. Actually in & around greater Boston there are literally cranes all over and in many towns available inventory across the board is literally one week or less.. Most homes are selling now for well over asking — then there are property taxes which can exceed $10,000 a year on Long Island & in Westchester Country (where the median price is more like $755,000 not $250,000 (which was the median price back in 1997)
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Slumping sales?
sticky (high) prices —> drop in volume —> (finally) price cuts —> lower priced comps fed into appraisals —> rinse / repeat
Let the virtuous, er, vicious cycle begin.
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Properties stayed on mkt 30 days, down from 36 days a yr ago.
Inventory down 6.5% from a yr ago.
Prices up yr/yr 66 consecutive months
Said it to you last month, I’ll keep saying it : “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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“Inventory down 6.5% from a yr ago.”
…
So?
Have you ever asked yourself WHY inventory down?
Because the sellers know they can’t get the price they want. That is called shadow inventory.
I know several good RE agents. They’ve told me they will only take listings (it costs the agent money to list) if seller’s agree to their price.
My above cycle will be proven correct … again.
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We might be closer to agreement. Still think we are in “sticky price” stage. In my locale (in hindsight) market peaked (by volume and price) summer 2005. Then chopped for a year or so before ultimately starting down.
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when they start going down, wake me up. In the mean time, I’m going to go play with my dogs.
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“when they start going down, wake me up.”
…
Ha, it will be too late then.
A LOT of people (shadow inventory) are holding a bag of dog poo NOW … and don’t even realize it.
Good luck exiting under YOUR terms.
The first loss the best loss.
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Who said anything about exiting? I belong on one of those compulsive hoarding shows. I like to collect stuff. Bought another home just last month 🙂
My opinion is merely as a spectator. But honestly, I have never seen volume as a good indicator in any market. I know some like to look at it, but for me it never worked anywhere. I’ve seen price vaporize, both ways, several times, on no volume.
oh, and there are no good losses.
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“I have never seen volume as a good indicator in any market.”
…
Volume for existing and new single home sales dropped prior to last recession.
If you wait for outright price declines to trend … you will be chasing market down.
Did not say “good” … rather “best”
There is a difference
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Tony B.,
So if you’re correct next month you’ll be 1 for 67? No one knows where the top is, but with an indicator like declining inventory, and constant demand, prices do appear to be solid. There’s been no shortage of predictions of lower prices…for the last 30% of increases.
wrldtrst is spot on.
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The real estate market is like a super tanker turning. Market volume could easily go soft / chop for months before prices fall.
Volume is the tell. Not prices.
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Housing as a financial metric seems odd. Short of new construction, a person who sells is typically also a buyer. In the face of weak income growth, short of downsizing, what are the financial implications of existing homes sales. It seems people used to pretty much stay in one home for much of their lives, selling when dead. Now homes are looked at much as stocks, just another financial instrument lying in wait for inflationary profits.
At some point it would seem that people simply got tired of “trading” while profiting agents and title companies.
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In fully financialized Dystopias, the official goal is that everything is viewed as a “financial instrument.” Which is simply Newspeak for “The most convenient mechanism available, by which the Central Bank and Government can redistribute as much wealth as possible, as arbitrarily as possible; from those who are productive, to those who are connected.”
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Rents are rising just as or even more rapidly than prices. Many of these new multi family rentals that I mentioned above START at over $3,000 a month for a 650 square foot one bedroom (though the same apartment would cost over $4,000 in Manhattan) PLUS there is the brokers fee which is either one month or 15% of the annual rent
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Has the NAR ever attributed poor sales to prices being unaffordable?
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a few years back i considered selling my older home and buying a new home, but the problem was the value of my older home didn’t come near what a new home would cost. why wasn’t my existing home rising in value as fast as new construction? why is the cost to rebuild 25% higher than the market value. building costs which were $100 a sq ft some years ago are now $200. why?
for one thing immigration has slowed to nothing, even before that wall gets built, which is like building the Maginot line in France after Hitler invades. wages are fueled by rising rents, so casual labor that was once $10 and hour is now $20 or more.
but to fast forward to now, it seems like the spread has narrowed, which could mean just one thing, the bubble is reaching the speculative limits. but keep your eye on LIBOR if it breaks higher the Fed has little choice but to follow, and raising rates might cool down this housing market a bit. minor pullbacks in home sales are a good sign, because the inflationary headwinds are much stronger than any hurricane that hits land this season
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Many builders say they cannot build smaller cheaper home profitably so they concentrate on the upper end. New builds cost/sq ft is becoming ridiculous. There are shortages of labor both skilled and unskilled. Where are all the “illegals” going, they used to pick up a lot of the labor slack and keep building costs down. The demand and rise in home prices are a result of artificially low rates and to some extent the mortgage interest deduction and govt home loan guarantees/ and buying mortgage backed securities all increase demand/prices. I don’t see any drop in demand.
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“Existing home sales in August dropped for the fourth time in five months…”.
So how is this ‘unexpected’? Why do bloggers blindly repeat such obviously prejudiced spin?
I will never understand this utterly unearned respect that otherwise smart people have for plainly corrupt (though ‘official’) sources of data.
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In the chart “Upward Trend Over?”, the break of the support line drawn does not necessarily mean the trend is over. It does mean the topping process is taking place. I’d wait for home sales to drop the bull channel width below the support line before getting out the honey.
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