Existing Home Sales Rise More Than Expected, Return to 2016-2017 Levels

-edited

Existing home were better than expected in August. NAR Chief Economist Lawrence Yun credits falling interest rates.

Better Than Expected

2018's Home Sales Slump Erased

Mortgage News Daily reports 2018's Home Sales Slump Now Fully Erased

While the increase wasn't as strong as in July, last month's existing home sales posted a second straight month of gains and, as previously, the National Association of Realtors® (NAR) credited falling interest rates. Sales of previously owned single-family houses, townhouses, condominiums, and cooperative apartments were up 1.3 percent compared to July when sales rose 2.5 percent. The seasonally adjusted annual rate of 5.49 million units was 2.6 percent higher than the August 2018 pace of 5.35 million. The increase was felt in three of the four major regions while the West continues to demonstrate some weakness.

The month's results were better than predicted. Analysts polled by Econoday had expected them to come in at an annual rate of 5.30 to 5.42 million with a consensus of 5.38 million.

Single-family home sales rose from 4.84 million in July to 4.90 million in August, a 1.2 percent gain and 2.9 percent above the August 2018 rate. Existing condo sales rose 1.7 percent from July to 590,000 annual units, largely unchanged from the previous August.

Yun criticized the quarter point cut in the Fed Funds rate made by the Federal Reserve on Wednesday. "[The Fed] should have been bolder and made a deeper rate cut, given current low inflation rates," he said. "The housing sector has been broadly underperforming but there is huge upward potential there that will help our overall economy grow."

Housing Bubble Continues

  • Northeast: Sales in the Northeast increased 7.6 percent from July to an annual rate of 710,000 units, 1.4 percent higher than in August 2018. The median price fell 0.3 percent on an annual basis to $303,500.
  • Midwest: Existing-home sales grew 3.1 percent in the Midwest to an annual rate of 1.31 million, topping sales from a year earlier by 2.3 percent. The median price jumped 6.6 percent to $220,000.
  • South: In the South there was a gain of 0.9 percent in sales to a rate of 2.33 million and sales were 3.6 percent higher year-over-year. The median price of $240,300 was a 5.4 percent annual increase.
  • West: While sales remained 1.8 percent higher on an annual basis, the West was an outlier in August. Existing home sales declined 3.4 percent to 1.14 million. Prices, however, continued their strong appreciation, rising 5.7 percent to $415,900.

Mike "Mish" Shedlock

Comments (9)
No. 1-8
Maximus_Minimus
Maximus_Minimus

And in other news, interest rates are heading down from a long period of highs. Could there be a connection?

Sechel
Sechel

Wondering if investor owned properties are leading the way.

bradw2k
bradw2k

"Prices, however, continued their strong appreciation, rising 5.7 percent..."

Who needs yield when there's this strongish economy that pays me just to be a homeowner.

Tony Bennett
Tony Bennett

"The median existing home price for all housing types in August was $278,200, up 4.7 percent from the median a year earlier of $265,600."

...

That all?

Playing around with mortgage calculator. 30 yr mortgage ~ 3.6% in August 2019 ... as opposed to 4.6% - 4.7% in August 2018 ... based on $300K home with standard fees ... the same monthly $ in August 2019 (as 2018) would purchase a home around $328K.

August 2019 had 5 Fridays which are very good for closings. With interest rates backing up in September, August good news likely one - off.

Harry-Ireland
Harry-Ireland

Well that's just great. I'm sure the podpeople are delighted to see homeownership getting further and further away with each passing day.

Sechel
Sechel

I just looked at a graph of the 5 year purchase mortgage index. we're close to a high. People are borrowing for these homes

Casual_Observer
Casual_Observer

Housing will be okay until employment rolls over. The rising tide lifts all boats.

JG1170
JG1170

I don't buy it. Here in California, the majority of cities have unquestionably seen a 2-6% decline in prices in 2019. Inventory took a nosedive last month but has been shooting back up this last week in a noticeable way. Homes are beginning to pile up in the super-pricey-but-no-way-that-price-it-worth-it cities, like Irvine. Last week, Irvine had an already massive 1140 homes for sale on Redfin, but this week it jumped to 1220-ish.