Existing Home Sales Bounce Back in July

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The pace of existing home sales – closed sales – ROSE 2.5 percent, 130,000, in July to a seasonally adjusted annual sales rate of 5.42 million;
  • Median price of an existing single-family home FELL 1.6 percent, $4,500, to $280,800;
  • Year-year the median price is up 4.3 percent or $11,500;
  • Number of homes available for sale FELL 30,000 or 1.6 percent to 1.89 million;
  • The months’ supply of homes for sale in May SKIDDED 0.2 months to 4.2 months.

Trends:

  • The July increase in closings was only the fourth monthly gain in the last 16 months;
  • The June sales pace was revised up 20,000 to 5.29 million;
  • Year-year sales were UP 1.5 percent, the first increase in year-year sales since February 2018;
  • The median price of an existing single-family home FELL for the first time since January;
  • The month-month DECLINE in homes for sale was the first inventory drop this year.

Data Source: National Association of Realtors: (NAR)

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Realtors finally had something to celebrate in July as the pace of closings on existing single-family homes improved but the celebration could be short-lived as the median price of a new home dropped along with the inventory of homes for sales.

Based on the report of pending home sales, August should be another good month for closings as the Pending Home Sales Index (PHSI) in June rose 2.8 percent, better than twice the 1.1 percent boost registered for May. Closings typically occur six weeks after contracts are signed for pending deals suggesting some of July’s strong gain in closings could have reflected the jump in pending sales in June.

The drop in the median price of a new home for the first time this year could put the brakes on closings though by shrinking the inventory of homes for sales which has been a persistent problem for realtors. Most recent data on homeownership by age cohort though suggested seniors may no longer be holding out for higher prices. That said, price may no longer be the deciding factor in home sales with a steady decline in mortgage rates. Freddie Mac reported last week the average rate for a so-year-fixed rate loan – the most popular of mortgage products – was 3.60 percent, a drop of 1.34 percentage points since last November. That would reduce the monthly payment on a $300,000 mortgage to $1,363.94 from $1,599.48, savings of $235 per month. Sellers, aware of the lower rates, could continue to seek top dollar.

Even removing price from the bargaining picture though may not resolve other issues and stumbling blocks as would-be buyers face burdensome student loan obligations.

Hear Mark Lieberman every Friday, on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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