Washington D.C., USA: Existing-home sales remained steady in August after four straight months of decline, according to the National Association of Realtors®. Sales gains in the Northeast and Midwest canceled out downturns in the South and West.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, did not change from July and remained at a seasonally adjusted rate of 5.34 million in August. Sales are now down 1.5 percent from a year ago (5.42 million in August 2017).
Lawrence Yun, NAR chief economist, says the decline in existing home sales appears to have hit a plateau with robust regional sales. “Strong gains in the Northeast and a moderate uptick in the Midwest helped to balance out any losses in the South and West, halting months of downward momentum,” he said. “With inventory stabilizing and modestly rising, buyers appear ready to step back into the market.”
The median existing-home price for all housing types in August was $264,800, up 4.6 percent from August 2017 ($253,100). August’s price increase marks the 78th straight month of year-over-year gains.
Total housing inventory at the end of August also remained unchanged from July at 1.92 million existing homes available for sale, and is up from 1.87 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace, consistent from last month and up from 4.1 months a year ago.
Properties typically stayed on the market for 29 days in August, up from 27 days in July but down from 30 days a year ago. Fifty-two percent of homes sold in August were on the market for less than a month.
“While inventory continues to show modest year over year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” said Yun. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory – especially moderately priced, entry-level homes – would propel sales.”
Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in August were Midland, Texas; Fort Wayne, Ind.; San Francisco-Oakland-Hayward, Calif.; Columbus, Ohio; and Boise City, Idaho.
According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage increased to 4.55 percent in August from 4.53 percent in July. The average commitment rate for all of 2017 was 3.99 percent.
“Rising interests rates along with high home prices and lack of inventory continues to push entry-level and first time home buyers out of the market,” said Yun. “Realtors continue to report that the demand is there – that current renters want to become homeowners – but there simply are not enough properties available in their price range.”
First-time buyers were 31 percent of sales in August, down from last month (32 percent) but the same as a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34 percent.
“Realtors across the country report that their clients waver about the decision to list their home; they are excited by the prospect of receiving many offers, they are concerned that they will not be able to find a new home to purchase,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri and CEO of RE/MAX Boone Realty. “Unfortunately this fluctuating view is contributing to the short supply of homes. Buyers hoping to find an entry level home in this market should work with a Realtor® and be prepared to move quickly as listings sell quickly.”
All-cash sales were 20 percent of transactions in August, unchanged from July and a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in August, unchanged from July and down from 15 percent a year ago.
Distressed sales – foreclosures and short sales – were 3 percent of sales in August (lowest since NAR began tracking in October 2008), unchanged from last month and down from 4 percent a year ago. Two percent of June sales were foreclosures and 1 percent were short sales.
Single-family and Condo/Co-op Sales
Single-family home sales were at a seasonally adjusted annual rate of 4.75 million in August, unchanged from July, and are 1.0 percent below the 4.8 million sales pace a year ago. The median existing single-family home price was $267,300 in August, up 4.9 percent from August 2017.
Existing condominium and co-op sales were at a seasonally adjusted annual rate of 590,000 units in August (unchanged from last month), and are down 4.8 percent from a year ago. The median existing condo price was $244,500 in August, which is up 2.0 percent from a year ago.
August existing-home sales in the Northeast increased 7.6 percent to an annual rate of 710,000, but are still 2.7 percent below a year ago. The median price in the Northeast was $292,800, which is up 2.6 percent from August 2017.
In the Midwest, existing-home sales rose 2.4 percent to an annual rate of 1.28 million in August, but are still down 0.8 percent from a year ago. The median price in the Midwest was $208,500, up 3.4 percent from last year.
Existing-home sales in the South decreased 0.4 percent to an annual rate of 2.23 million in August, up from 2.19 million a year ago. The median price in the South was $227,900, up 3.2 percent from a year ago.
Existing-home sales in the West dropped 5.9 percent to an annual rate of 1.12 million in August, 7.4 percent below a year ago. The median price in the West was $392,900, up 4.8 percent from August 2017.
Borrowing costs have risen this year and property price gains — while moderating — continue to outpace wages amid a persistent shortage of available listings. Those affordability hurdles are especially burdensome for younger prospective buyers looking for their first homes.
Buyers are getting help from a steady job market and healthier finances. While overall consumer confidence remains elevated, the latest University of Michigan report showed Americans see home buying conditions as less favorable than a few years ago.
Homebuilding also is struggling to pick up steam, government data showed Wednesday. While housing starts rose, permits — a proxy for future construction — fell to the slowest pace since May 2017, with single-family authorizations dropping the most in seven years.
Why Markets Care About Existing Home Sales Also Called Home Resales
Existing Home Sales report is released monthly, about 20 days after the month ends, by the National Association of Realtors (NAR).
It measures annualized number of residential buildings that were sold during the previous month, excluding new construction. While this is monthly data, it’s reported in an annualized format (monthly figure x12).
The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.
Existing Home Sales is a leading indicator of economic health because the sale of a home triggers a wide-reaching ripple effect. For example, renovations are done by the new owners, a mortgage is sold by the financing bank, and brokers are paid to execute the transaction.
Other Economy News : U.S. Leading Economic Index Climbs Slightly Less Than Expected In August
Indicating the U.S. economy will continue expanding through 2018, the Conference Board released a report on Thursday showing a continued increase by its index of leading economic indicators in the month of August.
The Conference Board said its leading economic index rose by 0.4 percent in August after climbing by an upwardly revised 0.7 percent in July.
Economists had expected the index to advance by 0.5 percent compared to the 0.6 percent increase originally reported for the previous month.
“The leading indicators are consistent with a solid growth scenario in the second half of 2018 and at this stage of a maturing business cycle in the U.S., it doesn’t get much better than this,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board.
He added, “The strengths among the LEI’s components were very widespread, further supporting an outlook of above 3.0 percent growth for the remainder of 2018.”
However, Ozyildirim noted the leading index’s growth trend has moderated since the start of the year and said industrial companies more sensitive to the business cycle should be on the lookout for a possible moderation in economic growth next year.
The continued increase by the leading index reflected positive contributions from seven of the ten indicators, including the ISM New Orders Index, the Leading Credit Index, the interest rate spread, and stock prices.
Negative contributions from building permits, average weekly manufacturing hours and manufacturers’ new orders for non-defense capital goods excluding aircraft limited the upside for the index.
The report also said the coincident economic index edged up by 0.2 percent in August, matching the uptick seen in July. All four indicators that make up the index increased in August.
The lagging economic index also rose by 0.2 percent in August after dipping by 0.2 percent in July, reflecting positive contributions from the average duration of unemployment and the ratio of consumer installment credit outstanding to personal income.