Existing Home Sales Hiccup in July 2016 — Down 3.2 Percent Sequentially from June and Off 1.6 Percent Year-Over-Year

Existing home sales hiccupped in July 2016, falling 3.2 percent versus June and down 1.6 percent year-over-year to 5.39 million on a seasonally adjusted annualized rate (SAAR), according to the National Association of Realtors® (NAR). Median price rose 5.3 percent from a year ago to $244,100. Median prices have now risen 53 consecutive months on a year-over-year comparison.

The following graph shows home sales on a SAAR and median prices (not seasonally adjusted) since 2009. As you can see, prices continue to escalate given the less-than normal 4.7 months of inventory — with six months considered normal. The number of active listings in July was 2.13 million homes, however, was up 0.9 percent from a year ago.

8-26-16 graph
August was the first month this year when sales were less than a year ago, as shown in the following table.

8-26-16 table1

Median prices, however, continue to climb on a year-over-basis, as shown below.

8-26-16 table2

Other details and metrics in the NAR release included:

  • 32 percent of sales were bought by first-time homebuyers, down slightly from 33 percent the prior month, but up from 28 percent a year ago
  • One-in-five purchases were all-cash transactions (21 percent), 23 percent a year ago and 22 percent in June
  • Investors bought one-out-of-nine sales (11 Percent) and paid all-cash 70 percent of the time
  • Just one-in-twenty July sales (5 percent) were distressed transactions with 4 percent being foreclosures and 1 percent short sales
  • The typical foreclosure sold at an average 18 percent discount compared to non-distressed transactions, with short sales at a 16 percent discount
  • 47 percent of July home sales were on the market less than one month
  • Typical time on the market in July was 36 days, with non-distressed sales 34 days, foreclosures 54 days and short sales 95 days

To read the entire NAR press release and also access the underlying data click http://www.realtor.org/news-releases/2016/08/existing-home-sales-lose-steam-in-july

My two cents? The drop in July sales, I believe, is primarily in the higher-end market, as the political scene nationwide heading into the November elections and related uncertainty is temporarily putting this segment of buyers on the sidelines. From a positive perspective, the U.S. did add 255,000 net new jobs in July, a 1.72 percent year-over-year gain.

Am I worried about housing sales going forward? Nope – jobs drive everything, including home sales.

Let’s talk a month from now. Or two, given the upcoming election.

Ted

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