August Home Sales Forecast: Steady into Autumn

By Aaron Terrazas on 20 Sep 2016

• Zillow expects existing home sales to rise 2.25 percent in August from July, to 5.51 million units at a seasonally adjusted annual rate (SAAR), roughly reversing last month’s surprisingly large decline.
• New home sales should fall 0.9 percent to 648,000 units (SAAR), up 28.4 percent over the year and holding near their highest levels since fall 2007.
• The median price of existing homes sold is expected to rise 1.4 percent, and the median price of new homes sold should rise 4.2 percent.

As the summer winds to a close, August existing home sales are expected to make up some of the ground lost earlier in July, while sales of new homes largely keep chugging upward, according to Zillow’s August home sales forecast.

Tight inventory finally caught up with existing home sales in July with sales falling 3.2 percent after meeting or beating expectations for much of the spring. The August home sales forecast predicts a slight recovery in existing home sales, only bringing them back in line with the range that has prevailed since March.

Our forecast for existing home sales points to a 2.25 percent increase from July to August and a 4.2 percent rise from a year ago, bringing sales to 5.51 million units at a seasonally adjusted annual rate (SAAR) (figure 1).

New home sales have also proven surprisingly strong, beating expectations for the past eight months. During the early years of the economic recovery, existing home sales recovered and new home sales remained stubbornly low. But in 2016, this narrative has reversed: Existing home sales have stagnated – weighed down, in part, by tight inventory – while new home sales have jumped sharply upward. In July, new home sales surged 12.4 percent to their highest level since fall 2007.

The August home sales forecast suggests new home sales will hold roughly steady near these nine-year highs, edging down only 0.9 percent to 648,000 units (SAAR). This would leave new home sales up 28.4 percent compared to August 2015 (figure 2). Given July’s exceptionally strong results, it would also not be a surprise to see a downward revision to July’s new home sales numbers.

We expect the median price of existing homes sold to grow 1.4 percent to $232,400 (up 6.15 percent over the year) and the median price of new homes sold to rise 4.2 percent to $310,700 (up 3.0 percent over the year).