August Existing Home Sales: Rapid Reaction
The housing market certainly isn't frozen – its long summer is far from over – but there’s a definite chill in the air.
• August existing home sales fell 1.5 percent from a year ago and were flat from July, at 5.34 million sales (seasonally adjusted), according to the National Association of Realtors.
• Although hardly a strong signal, August sales broke a string of four consecutive month-over-month declines in existing home sales.
• The median (not seasonally adjusted) price of existing homes sold in August was $264,800, up 4.6 percent from a year earlier. Inventory was unchanged from July at 1.92 million existing homes for sale and up 2.7 percent from a year ago.
At this point for home sales, the absence of bad news is good news. Home sales halted their four-month slide in August but failed to climb, holding steady at their July pace. The uninspiring data come as no surprise and notch another signal that the housing market has entered a meaningful cooling period following its white-hot growth of recent years.
Existing home sales have slowed steadily through the first three quarters of 2018 and now sit at the lower end of a narrow range they have occupied for the past two years. Except for a couple months in mid-2017, they are at their lowest level since late 2015. It’s no buyers’ market yet, but this sixth consecutive year-over-year drop — which is also the largest since August 2016 — hints that one is on the far horizon.
Low inventory certainly explains some of the sluggishness we’ve seen in sales: If there are very few homes available to buy, then very few will sell. But tight supply is a waning culprit for home sales woes. Supply remains tight but is starting to ease and has posted year-over-year increases in a handful of markets. More recently, higher interest rates and tax changes are waxing headwinds. Interest rates remain very low by historic standards, and changes to taxes should theoretically hit sales in some parts of the country but boost others. The combined effect nets to a thousand small cuts sapping demand.
The housing market certainly isn’t frozen – its long summer is far from over – but there’s a definite chill in the air.
