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?