Existing Home Sales Slump As Prices Soar To Record Highs

Tyler Durden's picture

Following yesterday's collapse in new home sales, NAR reports that existing home sales in April also disappointed - dropping 2.3% (and March revised lower). This drop happens as median home prices spiked 6.0% YoY to record highs as sales declines are blamed once again on a lack of supply (forget affordability?).

Highlights include:

  • Existing-home sales at 5.57m, vs est. of 5.65m
  • March at 5.7m; revised from 5.71m
  • Existing-home sales fell 2.3% after rising 4.2% prior month
  • 4.2 months supply in April vs. 3.8 in March
  • Inventory rose 7.2% to 1.93m homes
  • 1st-time buyers 34% of total sales; all cash 21%; investors 15%
  • Distressed sales 5% of total sales

Don't be too surprised...

The median existing-home price for all housing types in April was $244,800, up 6.0 percent from April 2016 ($230,900). April's price increase marks the 62nd straight month of year-over-year gains.

However, as has traditionaly been the case, the bulk of price increases has been toward the upper end:

Total housing inventory at the end of April climbed 7.2 percent to 1.93 million existing homes available for sale, but is still 9.0 percent lower than a year ago (2.12 million) and has fallen year-over-year for 23 consecutive months. Unsold inventory continues to rise and is at a 4.2-month supply at the current sales pace.

Lawrence Yun, NAR chief economist, says every major region except for the Midwest saw a retreat in existing sales in April.

"Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market," he said.

 

"Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase."

As a reminder, the May University of Michigan Consumer Sentiment survey showed a six-year low among those who think it’s a good time to buy a house and a 12-year high among those who say it’s a good time to sell. Disparities of this breadth tend to coincide with break points and that’s just where we’ve landed in the cycle.

The beginning of May officially marked the advent of a buyers’ market, defined simply as sellers outnumbering buyers by a wide enough margin to trigger falling prices. Yes, it’s the moment buyers have been waiting for. It is also the moment private equity investors, those who’ve crowded out natural buyers, have been dreading.

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BullyBearish's picture

blow off top in process...

BorisTheBlade's picture

Consequences? It's by design.

They reinflated real estate market without moneycopters.

Sans-culottes's picture

BULLISH...No way the Fed would allow the market conditions of an asset bubble, would they? / Sarc

j0nx's picture

Without a doubt in the NoVa area it is lack of supply. Aint shit on the market and what is sells in days.

John Law Lives's picture

There's never been a better time to buy a home... (laugh track is deafening).

NAR rhymes with FUBAR.

auricle's picture

There's never been a better time to buy a home...

 

...for the Chinese hot money. 

 

Shouldn't the home buying conditions be an inverse graph of the home selling conditions? Instead the buying conditions are always awesome and the selling conditions continue to improve. 

John Law Lives's picture

Central Banks have performed magic...

Fed_FUBAR

Yen Cross's picture

 New home sales were a turd in the punch bowl yesterday, and now existing termite mounds aren't selling.

small axe's picture

I'm hoping some uber-rich foreigner will buy my trailer out behind the landfill. It's a nice place when the wind is right.

Silver Savior's picture

No because I might need it since I am under Trump's oppression. At least I could go aluminum can hunting at night when no one is there. lol. 

christiangustafson's picture

Seattle is now full of unbelievably shitty plastic and sawdust box townhouses.  It looks as though Ballard has been invaded by a fleet of spaceship landing craft.

Better get one before you are Priced Out Forever.  Forever is a long time.

There is a yuge apartment glut coming as well.  Every edge lot in town has been scraped clean of its former distraction to build build build "luxury" apartments.

I am Jobe's picture

No different in Austin, Texas. Had to move out of Austin, glad I did 

christiangustafson's picture

The bigly sweet spot looks like $2500/mo for an apartment.  

But what happens if <redacted> stops hiring?

WakeUpPeeeeeople's picture

In Austin, back in the mid '80s it was booming much like today. Then by the late '80s they were practically giving them away. It was a great time to get into the slumlord business.

I am Jobe's picture

Great .  I am starting to see for sale signs lot more propping up in Austin area. Maybe this is the best time to buy a house and then pry and hope one dosen't lose their job. Of course there is also property taxes 

Hitlery_4_Dictator's picture

Fuck Austin, Buda, Cedar Park, Round Rock, Georgetown, Dripping Springs, Westlake, Kyle, Liberty Hill, Pflugerville, Elgin, Taylor, Hutto, San Marcos. Thise palces are finished, ruined, over, never to recover.....get out now. I moved to an undisclosed place on 8.5 acres, no I'm not saying and you can't move here. 

 

You would have to be a complete moron, retard, faggot to buy anything near those areas now, or at anytime in hte last 3-4 years.  Stupid has a way of paying for it however,  the payment for being stupid is coming soon. 

John Law Lives's picture

Housing prices have risen an absurd amount within the DFW area.  DFW is growing evermore into a massive concrete jungle.

Hitlery_4_Dictator's picture

Avoid any large TX city, it's a jungle.  Is it perfect where I live, no but at least I can afford it here.  Property taxes in the above locations will bankrupt a person and they are raising it by large percentages every year.  I was hoping Abbott was going to tackle property tax reform, so far nothing.  So far this week I saw two deer and coyote and about 100 hog tracks on my property. 

I know not everyone can do what I have done, I work from home so I don't care about the commute.  My wife commutes 47 miles each way however.  Life is much slower out here. 

 

Pros:

I never see CA plates and don't live near any CA tards.

I can shoot whenever I want.

I have total privacy as I live in the woods surrounded by trees. 

I live by real Texans who know how to raise food and take care of each other. 

I have access to over 300 acres on the back, where my gate opens up to neighbors property. 

 

Cons:

There are no rules for anything out here, meaning you never know who and what is going to be your neighbor.  

But I suppose if you want to live free, that's the price you have to pay.  I got some new neighbors building next to me and they want to rent out a few homes out to multiple familes.  Oh well. 

It's hot and humid because of all the trees. Right now the pros outweigh the cons. If it ever gets bad I can sell, there is almost no land for sale around here, so demand is quite high. 

You have to provide your own security, which I think is a good thing.  There are no cops around. 

John Law Lives's picture

Thanks for the reply.  That is quite interesting.  Yes, property taxes in Dallas (and many other Texas cities) are quite high.  

I have never seen a wild boar up close, but I understand you can shoot as many wild boar as you like in Texas.  No limit.

GatorMcClusky's picture

Out in Luckenbach , Texas there ain't nobody feelin no pain.

Consuelo's picture

 

 

Just Willie, Waylon & the Boys ---

Yen Cross's picture

  This good for the euro at six month highs vs the $usd. This is good for the YUAN?  The soft dollar is great for imports, sans 1.2 and 1.5 $trillion in subprime debt.

 Ohh--- I forgot to mention the 4.6 UN> employment rate. If you you work 3-4 part time jobs, you're employed. lol

BullyBearish's picture

all those ticky-tacky shacks ready for the hoards of student loan forgiven 1st time "home" buyers at subsidized interest rates...

 

Yen Cross's picture

 HARP 110.00% loans

 You read that Blackrock article yesterday?  $2.6 in subprime loans, that we know about? I'd say it's $3t plus.

  This isn't EVER getting paid back. I see global forbearance until TEOTWAW`it

Stick in the Mud's picture

Could this be a sign that there's a PPT (e.g. Blackrock) propping up real estate? If you're going to have a PPT for stocks, why stop there? Why not a PPT for auto subprime too. Cash for clunkers coming, so I'm holding on to my '86 Toyota Tercel!

IENTJ's picture

TEN THOUSAND YEAR BONDS is the only way out of this death spiral.

https://youtu.be/lQ1zVarULS0

Bank_sters's picture

Well naturally!

And when people put 75 percent of their income towards rent/mortgage and are unable to make their property tax bill we will hit escape velocity.

Meanwhile, the pensions are breathing a little easier...  Cough.

How dem subprime auto loans going? 

Do AI controlled markets take into consideration the proletariat? Trickle down Algos?

Silver Savior's picture

If I was into real estate I would just sell everything and buy bitcoin. Bitcoin can give you more gains and housing is going to impload anyway.

You could simply buy the crypto then sit back and do nothing. Kind of like what landlords do too. A tenant needs something fixed and the landlord does nothing. lol

earleflorida's picture

nows the tyme to buy physical.

period!

earleflorida's picture

but, condo's still remain reasonably price throughout the usa... in fact they've been stagnant

in a mobile society, whose gonna buy a house now, when in a couple of years you can pick the same house up for a 25%-30% disc. 

wisehiney's picture

Existing home sales = 90% of sales.

Mucho fewer middleman transactions - commissions, inspections, appraisals, bank fees, attorneys etc.

Not to mention new appliances, furniture, flooring, paint etc etc 

 

earleflorida's picture

...equal nickle, dime'd to death! 

swmnguy's picture

I'm in Minneapolis.  Prices are high, but homes in decent condition in decent neighborhoods are selling in hours, often for over the asking price, with multiple offers.  Last week another poster gave me information showing the number of sales is significantly down in this area too; contrary to my perceptions and making me question what I'm seeing and hearing anecdotally (I'm not in the real estate industry in any way).

Whenever data and perceptions don't match, I get that creeping 2005-2006 feeling.  Fortunately I'm well-situated for the next several years, not looking to sell my house and buy something smaller--just yet.  I have a lot of equity so I'll have a lot of flexibility with pricing when the kids do leave and stay gone long enough that my wife and I look for the small house to get old in.

ZIRP has a lot of complex consequences.

earleflorida's picture

buyer beware...

some neighborhoods are moar equal than others?

Stormtrooper's picture

Take my advice as a parent of adult children.  When they do decide to move out, call the realtor immediately and get a deal done.  If you don't move fast enough, they'll be back.

swmnguy's picture

Hah!  My wife said the exact same thing the other day.  Her analogy was to the neighborhood lady who feeds the stray cats; they won't go away as long as they know there's going to be food.

I like a lot large enough for a little vegetable garden, but my wife and I by ourselves could live in a house half the size we currently have.  I need a full basement, preferably unfinished, to store all my tools, and an extra bedroom I can use as an office (not in the basement; I start to feel like a mutant troglodyte sitting in the basement all day).

South Minneapolis is full of 2 bedroom rambler/bungalow houses with about 850 finished square feet on one level and a full, unfinished basement.  The key is to find one in good shape, that hasn't had the stupid granite countertop, stainless-steel appliance "makeover" that only jacks up the price.  We had one as a starter home.  That's all we'll need as soon as the younger kid graduates high school in a year.  She may live at home for the first year or two of college, and then we'll be getting that realtor going.

totenkopf88's picture

have fun in MN drowning in a sea of Somalians- what's with Swedes and sowing the seeds of their own destruction?

Silver Savior's picture

I will gladly buy a house for a few bitcoins. That's all they are worth because most are total shitholes and property taxes galore. Sellers also like to tell bullshit stories about how good their property is while at the same time hiding a bunch of shit. 

Overleveraged_and_Impatient's picture

Whatever. I am now long S&P 500. It will not come down. Even if it does, the President's Working Group will prop it right back up.

Green2Delta's picture

My sister just bought a home. She has a master's degree, which has her convinced she's a genius, so I didn't even bother informing her that the market is ripe for a major correction. 

Anyway, the VA turned her down at first despite having a credit score of 820. Then USAA made her jump through hoops to get approved. All to no avail so she was forced to go with a different lender. Meanwhile as I look around our once all white town I see darkie after darkie being approved for mcmansions. Then proceeding to park multiple vehicles in the driveway and on the street. 

I asked her if she put down her race on the application to which she said "yes". Many of us are aware of the attack on white people and this is just more evidence to support our beliefs. I seriously doubt the darkies had to go through what my white sister did to get a home. 

Yen Cross's picture

  The $usd is already starting to colapse. It's not like what China has done. We can't sell our way out of debt.

 China is thirty one trillion dollars in debt [stated] I think it's closer to forty.

 WE live in a finite ecosystem. growth isn't an option.

 How is growth contained. Expensive healthcare, and lack of life quality.

BigFatUglyBubble's picture

give me five

still alive

ain't no luck

learned to duck

buzzsaw99's picture

i just want to gtfo of dodge

razorthin's picture

Because there is no inflation...

Well, there's no wage inflation anyway.

Consuelo's picture

 

 

Here in the Bay Area however...

 

Well, all I can say (again) is: 

Wake me up when word leaks out that FB, or GOOG, or AAPL, or NTFLX, or TWTR, etc., ad-infinitum, of (ssshhhhhh) ---- LAYOFFS...

Because when that happens, it may as well be a black hole event horizon for the NAS and the market as whole.

 

 

GunnerySgtHartman's picture

The Bay area: a lot of people are going to get seriously hosed when that RE market crashes.