Existing Homes Prices Up 88th Month: NAR Can't Figure Out Why Sales Are Down

-edited

NAR Chief Economist Lawrence Yun is scratching his head. He wonders why sales are weak. Duh?

The National Association of Realtors reports Existing-Home Sales Falter 1.7% in June.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 1.7% from May to a seasonally adjusted annual rate of 5.27 million in June. Sales as a whole are down 2.2% from a year ago (5.39 million in June 2018).

“Home sales are running at a pace similar to 2015 levels – even with exceptionally low mortgage rates, a record number of jobs and a record high net worth in the country,” said Lawrence Yun, NAR’s chief economist. Yun says the nation is in the midst of a housing shortage and much more inventory is needed. “Imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices,” he said.

Yun said other factors could be contributing to the low number of sales. “Either a strong pent-up demand will show in the upcoming months, or there is a lack of confidence that is keeping buyers from this major expenditure. It’s too soon to know how much of a pullback is related to the reduction in the homeowner tax incentive.”

Duh?

The median existing-home price for all housing types in June reached an all-time high of $285,700, up 4.3% from June 2018 ($273,800). June’s price increase marks the 88th straight month of year-over-year gains.

Hello Yun

Hello Mr. Yun. Did it occur to you for even a fleeting moment that people cannot afford homes, that prices have outstripped wages since 2012?

A chart of mine just might help.

Housing Bubble Reblown

Dear Lawrence Yun, please consider Housing Bubble Reblown: Last Chance for a Good Price Was 7 Years Ago

Instead of wondering why sales are so low, Yun ought to be thankful that home sales are as good as they are.

Yun ponders "lack of confidence" but buying at these levels actually suggests "overconfidence"

Mike "Mish" Shedlock

Comments (27)
No. 1-14
Sechel
Sechel

seemed obvious that if sales are down and home prices are up. the market is bifurcated. Are more sales occurring in the high end?

Tony Bennett
Tony Bennett

In 2006 I thought RE was waayyy out of whack.

I asked 2 RE agents (different markets but each had 20+ years of experience) their thoughts. Channeled each other with ~ market will plateau for a year or two till "fundamentals" catch up ... then onward and upwards.

Years later one had the nerve to tell me that things were "crazy" then and knew correction coming.

Mish
Mish

Editor

"seemed obvious that if sales are down and home prices are up. the market is bifurcated. Are more sales occurring in the high end?"

Your answer:

Carlos_
Carlos_

Mish you should send the wages vs prices chart to calculated risk. He never compares with wages...

Tony Bennett
Tony Bennett

A key question - what kind of haircut needed to move inventory?

In one market I follow, an agent (in March) told me 5% off of ask was average, with 10% in some cases. But sales slow. How long can sellers hold on ... before vicious (downward ) cycle commences?

DFWRealEstate
DFWRealEstate

Comical that Yun referenced record high net worth. It seems more and more that professional economists are trained in the art of being complete and utter morons. Any idiot could tell you that America's net worth is unequally distributed, with wealth inequality getting worse every year as a result of trickle-down fiscal and monetary policy. 88th consecutive month of rising prices, with wage growth trailing home price inflation. Yep, it truly is a mystery why home sales are rolling over.

Mish
Mish

Editor

How long sellers can hold on varies by market and inventory. A home less than 3 miles from me asking 1.3 Million just went for 710K. Ouch. But property taxes $30K per year and sitting vacant. Home right across the street 2 houses away 538 days on the market. Ouch

Mish
Mish

Editor

We would be selling into a very crappy market but at least we are mid-priced for the neighborhood. New Timeline: within 1 year !!! Goodbye Illinois. We will likely rent our house rather than sell.

Schaap60
Schaap60

It looks like the only good chance to buy a home this century was January 2012.

RonJ
RonJ

From a WirePoints article on Zero Hedge yesterday:

“Many, many people are saying it’s not financially beneficial for them to pay the taxes they pay on their homes, when every 11 to 13 years, they’re paying the total costs of their home in taxes,” said Harvey Ald. Keith Price, economic development committee chairman.

“I’ve talked to a couple of people that have personally told me that they are not paying their taxes anymore. They’re going to save their money, and within the two years they have (before they lose the house), they’ll just save all their money and leave.”
Jackula
Jackula

China's capital controls: We can't ignore hot money from the PRC slowed to a trickle in about June 2017 and the impact on real estate prices. This is about when my appraiser friend who appraises high end real estate here in LA had his business go off a cliff. Canada, Australia, and NZ are all having major problems in their real estate sectors since this occurred. Here pension fund managers are desperately chasing 7.5% annual returns by buying junk rated corporate debt paying 3-4% using leverage to hit their annual return goals for their underfunded pensions which in turn corporate management is using to buy back their own stock to inflate their share values and get stock value target based bonuses. Because it's pension funds the FED will do its damnedest to monetize bailing out the pensions along with the help of the tax authorities so we probably aren't experiencing or will have as brutal of impacts that Canada, Australia, and NZ will.

Six000mileyear
Six000mileyear

The low end of the housing market has dried up due to college debt payments. The upper end of the housing market has started drying up due to a decline in foreign (Chinese) property buyers. With little demand below, and pricing pressure above, the middle of the market will be forced lower. The traditional pillars of the US real estate markets (West Coast and Northeast) showed declining sales in all price ranges. That can't be a good sign for the US economy in general.

vadertime
vadertime

So, Lawrence Yun is the same idiot that was claiming that the housing crash from 10 years ago was just a correction. Wrong. That bubble finally exploded. Now this same idiot doesn't understand why homes aren't selling despite historically low interest rates. It's price and inventory, specifically in the low end of the real estate market. Most new home-buyers are young Millenials, who want entry level homes, but can't get find them, because baby-boomers like me have downsized into smaller homes that are easier to maintain and keep. Many Millinials are also staying put with parents or renting longer to save for their down payments - this contributes to the housing slowdown. The homes that tend be in greater inventories are those priced above 300K, everywhere except California, where you can't find anything for that price. Nobody is buying the McMansions built by my fellow baby boomers who retired to the sunbelt states and these are at the upper end of the price spectrum. It doesn't take a genius to figure this out, but then again Yun also believed the property bubble from 10 years ago would last forever. Go figure.

everything
everything

Keep selling the inventory to investors, foreigners, and flippers. Investors and foreigners don't really need to sell, and the flippers, just keep flipping the prices higher, increasing comps, property taxes, etc.

The economy has been on fire, many people working, bought homes and are just building equity.