NAR: Existing-Home Sales Decreased Slightly to 4.80 million SAAR in August

From the NAR: Existing-Home Sales Slipped 0.4% in August

Existing-home sales experienced a slight dip in August, marking the seventh consecutive month of declines, according to the National Association of REALTORS®. Month-over-month sales varied across the four major U.S. regions as two regions recorded increases, one was unchanged and the other posted a drop. On a year-over-year basis, however, sales fell in all regions.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, notched a minor contraction of 0.4% from July to a seasonally adjusted annual rate of 4.80 million in August. Year-over-year, sales faded by 19.9% (5.99 million in August 2021).
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Total housing inventory registered at the end of August was 1,280,000 units, a decrease of 1.5% from July and unchanged from the previous year. Unsold inventory sits at a 3.2-month supply at the current sales pace – identical to July and up from 2.6 months in August 2021.
emphasis added

The sales rate was above the consensus forecast, but as usual, was close to housing economist Tom Lawler’s estimate.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in August (4.80 million SAAR) were down 0.4% from the previous month and were 19.9% below the August 2021 sales rate. Sales are now below pre-pandemic levels and, excluding the pandemic decline, sales are now at the lowest level since 2014.

Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The second graph shows existing home sales by month for 2021 and 2022.

Sales declined 19.9% year-over-year compared to June 2021. This was the twelfth consecutive month with sales down year-over-year.

The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), for a few selected periods. Black and light Purple are the maximum sales per month during the bubble (2005) and the minimum sales during the bust (2008 - 2011). The most recent four years are shown (2019 through 2022).

Sales NSA in August (476,000) were 17.4% below sales in August 2021 (576,000).   Sales NSA year-to-date are down 11.3% compared to the same period in 2021.

This decrease, NSA, was similar to change in the markets I track each month.

Housing Inventory Decreased Slightly in August

The fourth graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.28 million in August from 1.30 million in July.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The fifth graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was unchanged year-over-year (blue) in August compared to August 2021.  This includes some pending sales - and doesn’t exactly match some other measures - and it seems likely that active inventory was up year-over-year much more in August than the NAR is reporting.

Months of supply (red) was unchanged at 3.2 months in August from 3.2 months in July.

Median House Price Growth Slowing

On prices, the NAR reported:

The median existing-home price for all housing types in August was $389,500, a 7.7% jump from August 2021 ($361,500), as prices ascended in all regions. This marks 126 consecutive months of year-over-year increases, the longest-running streak on record. However, it was the second month in a row that the median sales price retracted after reaching a record high of $413,800 in June, the usual seasonal trend of prices declining after peaking in the early summer.

Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices).

The YoY change in the median price peaked at 25.2% in May 2021 and has now slowed to 7.7%. The YoY increase in August was smaller than in July (9.5%) and suggests the Case-Shiller index will slow sharply soon. Note that the median price usually starts falling seasonally in July, so the 2.4% decline from July to August in the median price was partially seasonal (but the decline over the last two months has been much larger than the usual decline).

Based on the recent trend, it appears the median price will be down YoY later this year.

Existing home sales are being impacted by higher mortgage rates. Rates have increased sharply in September, and that will impact closed sales in October and November - so I expect further declines in sales later this year.