Existing Home Sales Slump To 1-Year Lows, NAR Says "There's Simply Not Enough Homes For Sale"

After July's housing sales data horrors, yesterday's permits rebound prompted some hope (despite last week's 9.7% collapse in mortgage applications) but August's existing home sales just crushed that dream, dropping to one-year lows. Following a 1.3% MoM decline in July, August saw existing home sales tumble 1.7% MoM (against expectations of a 0.2% rebound) and up just 0.2% YoY.

This is the 3rd monthly decline in a row...

Dropping SAAR sales to one year lows...

Nevertheless, NAR finds the usual scapegoat: not lack of affordability as a result of record high prices... 

The median existing-home price for all housing types in August was $253,500, up 5.6 percent from August 2016 ($240,000). August's price increase marks the 66th straight month of year-over-year gains.


... and wage growth that is less than 50% this increase, but rather Inventory. Lawrence Yun, NAR chief economist, says the slump in existing sales stretched into August despite what remains a solid level of demand for buying a home.

"Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales," he said.


"What's ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it's putting on prices in several parts of the country. Sales have been unable to break out because there are simply not enough homes for sale."

Yun tries to blame Hirricane Harvey

"Some of the South region's decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area. Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma. However, nearly all of the lost activity will likely show up in 2018."

But that is wrong since the closings represented in this data occurred before Harvey hit.

In all fairness, later in the release Yun did touch on what is really going on:

"Market conditions continue to be stressful and challenging for both prospective first-time buyers and homeowners looking to trade up," said Yun. "The ongoing rise in home prices is straining the budgets of some of these would-be buyers, and what is available for sale is moving off the market quickly because supply remains minimal in the lower- and mid-price ranges."

Some other details:

  • Properties typically stayed on the market for 30 days in August, which is unchanged from July and down from 36 days a year ago. Fifty-one percent of homes sold in August were on the market for less than a month
  • First-time buyers were 31 percent of sales in August, which is down from 33 percent in July and is the lowest share since last August (also 31 percent).
  • All-cash sales were 20 percent of transactions in August, up from 19 percent in July but down from 22 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in August, up from 13 percent in July and 12 percent a year ago.

Regional breakdown:

  • August existing-home sales in the Northeast jumped 10.8 percent to an annual rate of 720,000, and are now 1.4 percent above a year ago. The median price in the Northeast was $289,500, which is 5.6 percent above August 2016.
  • In the Midwest, existing-home sales rose 2.4 percent to an annual rate of 1.28 million in August, and are now 0.8 percent above a year ago. The median price in the Midwest was $200,500, up 5.0 percent from a year ago.
  • Existing-home sales in the South decreased 5.7 percent to an annual rate of 2.15 million in August, and are now 0.9 percent lower than a year ago. The median price in the South was $220,400, up 5.4 percent from a year ago.
  • Existing-home sales in the West fell 4.8 percent to an annual rate of 1.20 million in August, but are still 0.8 percent above a year ago. The median price in the West was $374,700, up 7.7 percent from August 2016.

At least expensive homes are selling like hotcakes:

Finally, as we noted previously, for those who need simplicity - here is the performance of US Homebuilder stocks relative to the performance of US housing market data...

So, why bother looking at the housing data at all?


FireBrander ejmoosa Wed, 09/20/2017 - 10:45 Permalink

Over the summer, Zillow would email about "price reduced" homes I had viewed...the "reduction" was sometimes just $500 on ~$150k homes...not much of a reduction.Now I'm seeing reductions in the $1500 to $3000 range; so the down pressure is building. What's really feeling the pain are the downtown condos...~600sqft for $180,000 (around here 180k will buy ~1400sqft home). Zillow just sent me a "Price reduced" on one of these 600sqft units...from $180k to $165k...OUCH! I drove by the building the other day; doens't look like anyone lives there...it's brand new too...and empty.

In reply to by ejmoosa

FireBrander Bay of Pigs Wed, 09/20/2017 - 10:53 Permalink

A friend is a realtor, just sold thier own home...it took 5 tries! 4 out of the 5 buyers were denied the loan! That's even with them stretching "what you can afford" to very limits.Another friend works the finance end of a motorcycle shop...he says 700 credit scores are like unicorns...everyone talks about them, but you never see one. Most buyers have horrible credit and takes a lot of "tweeking" to get the loan approved. People come in looking at ~$3000 used bikes and need to finance it which is difficult because few will finance anything used for more than the trade value which is way lower than the sale price.....and still, local furniture store is offering 3 year 0% financing on fucking furniture! Minimun purchase of $1000...people cant' even afford a couch!

In reply to by Bay of Pigs

Bay of Pigs FireBrander Wed, 09/20/2017 - 11:05 Permalink

The NAR is a terrible source on the RE market. They are in the Twilight Zone and regularly use misleading data to fool the public. This article is a fine example of that.

Fact is, loose monetary policy and extension of massive amounts of credit has led us to this point and yet another debt/housing bubble of epic proportions. It's going to get very ugly when it pops.

In reply to by FireBrander

yellensNIRPles ejmoosa Wed, 09/20/2017 - 11:06 Permalink

Exactly. What a bullshit narrative. Want to see how twisted these fucks are? Go to Zillow and start looking for homes for sale. There are hundreds of thousands of homes for sale everywhere, all the time.No one is buying them, and this is some sick attempt to con people into thinking they have to buy now before it's too late. 

In reply to by ejmoosa

Blankenstein yellensNIRPles Wed, 09/20/2017 - 15:58 Permalink

THIS. The NAR is comprised of a bunch of lying conmen.  There is a desireable neighborhood (not a huge subdivision and not the most expensive) in town that currently has 8 homes for sale and NONE are under contract.  The homes are around 50 years old, except one which was a teardown.  These houses usually sold fairly quickly in the past.  The problem is that the asking prices are as high as the peak in housing bubble 1.0.  Except for the teardown, they are 2300 - 3000 sq ft.  The lowest asking price is $445,000 and most of these houses need at least some updating.  In a couple of affluent suburbs a little further out, there is a lot of inventory including many nice homes on the market.  The problem is again that the asking prices are way too high and the listings linger and linger.  These houses sold for premiums during housing bubble 1.0, but not much has sold in the last year and a half.  It's a suckers market.  edit:BTW, the cheapest taxes on the 8 homes is $10,000 a year and they are $25,000 on the teardown.  

In reply to by yellensNIRPles

Anteater 2ndamendment Wed, 09/20/2017 - 10:25 Permalink

I just looked at a remodeled 1962 rambler on a 1/4-acre. Nice enough1,000SF 3BR 1BA in the 1960s 2x4 frameout, tiny living area, $325,000.That's $325 a square foot! My buddy just sold his 1998 condo, in a towerthat had to be completely stripped and reclad because of a faulty design,1,000SF 2BR 1BA for $525,000. He couldn't believe it. $525 a square footIS MORE THAN IT COSTS TO BUILT A CLASS A PRIVATE HOSPITAL. Andthat didn't include many $1,000s a year for property taxes and HOA 'dues'!!I did find a bargain!! A 1931 16x40 rambler on a sloping lot, supported on4x4 posts with no foundation. They said Cash Only $255,000. What a buy!

In reply to by 2ndamendment

Peak Finance Wed, 09/20/2017 - 10:15 Permalink

Well, bad this month, *HUGE* rebound next quarter.Do you know how many homes are uninhabitable after the Texas and Florida disaster? Plus, FEMA is down here throwing around HUGE amounts of money, on programs that I never heard of before, I don't know if these programs existed or if FEMA just makes this shit up as they go:1) Paying people for primary resience damage if they had no insurance2) Helping people pay for new apartments/rentals if their places were destroyed / uninhabitable3) Food stamps to replace contents of fridges / freezers

Bemused Observer Wed, 09/20/2017 - 10:16 Permalink

Well, maybe the banks holding so many properties should start releasing them onto the market. Let's all see what real estate is REALLY worth these days.I suspect that 'low inventory' is the only thing holding the prices up NOW.

Snaffew Wed, 09/20/2017 - 10:17 Permalink

I'm just outside of Albany NY...and everywhere I look, there are homes for sale.  I'm sure it has nothing to do with the massive tax bill one gets for owning a home in NY.

Kurpak Wed, 09/20/2017 - 10:18 Permalink

Prices are terrible for buyers so no one wants to sell and have to spend more money for less house. Better just stay put and wait for the crash. Check mate

PulledPorkBBQ Wed, 09/20/2017 - 10:22 Permalink

Conveniently, there is no mention of the vast numbers of 'affordable' homes that were scooped up by home-rental firms - Invitation Homes, et al.    Never to come back on the market...    the old housing market metrics no longer apply.

2banana Wed, 09/20/2017 - 10:23 Permalink

How to have plenty of AFFORDABLE homes for sale:Restore interest rates to an historical 5%Have banks eat their bad loans.  No taxpayers guarantees.Require 20% down.  Require a job that covers the mortgage with savings.Send bankers to jail.  Enforce fraud and GAAP laws. 

Snaffew 2banana Wed, 09/20/2017 - 11:09 Permalink

the gubbermint gets most of their tax revenue through home ownership...that is why school and property taxes keep soaring....home ownership has now become a trap perpetrated by the gubbermint to make one feel like they own their home.  you are actually just renting your slice of pie from the US gov't.

In reply to by 2banana

Xena fobe 2banana Wed, 09/20/2017 - 12:05 Permalink

Good start.  Also, end all immigration. 1 million new arrivals annually need homes.  Prohibit foreign ownership of residential RE.  Get govt out of the housing business, i e., HUD, FNMAE.  Limit of two single family residences per tax ID. Tax flippers at 100% of profit.  Better yet, imprison flippers.This will never happen, so get used to homeless in the streets.

In reply to by 2banana

gatorengineer Wed, 09/20/2017 - 10:24 Permalink

Even at these rates a 40 ish percent drop in price is required. The problem then becomes taxes would be more than the mortgage in many places. Then all of the civil service parasites need a haircut. We have 100 k a year teachers in my district. That has to be reset.

Solio Wed, 09/20/2017 - 10:25 Permalink

Mold is good in cheese, but very bad in homes that have been sitting on or held off the market. Don't want to think of the mold issues for homes anywhere in the south.

Bad Goy Wed, 09/20/2017 - 10:35 Permalink

Prospective home buyers have some mental issues.  They have caviar tastes and fast food budgets.  They want all the luxuries, ammenities, in the best areas near the best schools, with large square footages in HOAs (so their neighbor can't park their rusty truck on the street).So they only look at houses that are move in ready, with all the unnecessary stuff they want, but don't need; and are at or above what they can afford.And on the other side of things, there are the houses that can't be sold because the kitchen faucet is broken, or the heater doesn't work.  You can't get a loan on those houses.  Nobody can buy them except cash buyers.

pound the vix Wed, 09/20/2017 - 10:36 Permalink

My town in NJ has plenty of inventory (more than the last 8 years) and the prices are dropping.  Especially on the expensive 5000 sq ft McMansions.  Houses that sold for $1.4 Million in 2006 are now sitting on the market for $900k