July Existing Home Sales At Slowest Pace in a Year; Inventory Continue to Drop

 By Mark Lieberman

Managing Director and Senior Economist


  • The pace of existing home sales TUMBLED 1.3 percent or 70,000 in July to a seasonally adjusted annual sales rate of 5.44 million, the weakest since last August;
  • The June sales rate was REVISED DOWN 10,000 to 5.51 million;
  • Median price of an existing single family home FELL 1.9 percent or $5,000 to $258,300; the median price is still up 6.2 percent of or $15,100 from last July;
  • Year-year the median price was UP for the 65th straight month – since February 2012.
  • Number of homes available for sale DROPPED for the second straight month, down 1.0 percent or 20,000 to 1.92 million
  • The months’ supply of homes for sale in July REMAINED at 4.2, down from 4.8 months a year ago;

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More woes for the housing market. Following a report Wednesday that new home sale fell 9.4 percent in July, the National Association of Realtors (NAR) reported a 1.3 percent drop in existing home sales in the same month.

The NAR report measures closed transaction while the government report on existing home sales tracks contracts. There is no parallel report for closings on sales of new homes.

The NAR report was not entirely a surprise since the association’s report on contracts (Pending Homes Sales Index) for sale of existing home two months ago – roughly the time lag between contract and closing – showed a drop of 0.7 percent.

The real disappointment in the home sales report though was that the inventory of homes for sale fell 20,000 to 1.92 million or a 4.2 months’ supply of homes for sale at the current sales pace. The inventory decline is consistent with reports that aging baby boomers are keeping their homes off the market. The inventory of homes on the market, the NAR said, has fallen year-year for 26 straight months.

That decline is contributing to stagnant sales as the choice for would-be buyers is limited. Buying a home is not a transaction for which a buyer would compromise.


The home sale report tracks closings while the PHSI which tracks contracts for sale. The PHSI in February had dropped 0.9 percent. The two-month difference allows time for buyers to obtain the necessary financing.

The drop in closings came in the same month in which prices fell, an unusual phenomenon which has occurred only three times in the last 13 months – last December when the median price dropped 0.9 percent ($2,200 to $232,200) as sales dipped 1.6 percent and last July when the median price fell 1.8 percent ($4,400 to $243,200) as sales fell 2.7 percent. There isn’t necessarily a direct relationship between the median price and closings, but it is a factor in the mix. Probably a more significant factor is mortgage rates which, according to the weekly Freddie Mac Survey, climbed slightly from 3.90 percent in June to 3.97 percent in July.

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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