NAR: Existing-Home Sales Decreased to 5.12 million SAAR in June

From the NAR: Existing-Home Sales Slid 5.4% in June

Existing-home sales dropped for the fifth straight month in June, according to the National Association of REALTORS®. Three out of four major U.S. regions experienced month-over-month sales declines and one region held steady. Year-over-year sales sank in all four regions.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 5.4% from May to a seasonally adjusted annual rate of 5.12 million in June. Year-over-year, sales fell 14.2% (5.97 million in June 2021).

Total housing inventory registered at the end of June was 1,260,000 units, an increase of 9.6% from May and a 2.4% rise from the previous year (1.23 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, up from 2.6 months in May and 2.5 months in June 2021.
emphasis added

The sales rate was below the consensus forecast, but right at housing economist Tom Lawler’s estimate.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in June (5.12 million SAAR) were down 5.4% from the previous month and were 14.2% below the June 2021 sales rate. Sales are now below pre-pandemic levels.

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

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

Sales declined 14.2% year-over-year compared to June 2021. This was the tenth 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 June (526,000) were 14.5% below sales in June 2021 (615,000).   Sales NSA year-to-date are down 7.8% compared to the same period in 2021.

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

Housing Inventory is Increasing

The fourth graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.26 million in June from 1.15 million in May.

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 up 2.4% year-over-year (blue) in June compared to June 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 June than the NAR is reporting.

Months-of-supply at 3.0 months is almost double the record low of 1.6 months set in January 2022 - but still very low (red line above).

Median House Price Growth Slowing

On prices, the NAR reported:

The median existing-home price for all housing types in June was $416,000, up 13.4% from June 2021 ($366,900), as prices increased in all regions. This marks 124 consecutive months of year-over-year increases, the longest-running streak on record.

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 slowed to 13.6% in October (still very strong increase in prices), but then picked up a little again. The YoY increase in June was smaller than in May and suggests the Case-Shiller index will start showing slower growth soon. The median price will start falling seasonally in the July report.

Key point on Timing of Sales

Existing home sales are reported when the transaction closes. Sales in June were mostly for contracts signed in April and May. Recent data shows a significant slowdown in activity starting in May and decelerating further in June.

My sense is contracts for sales really declined in June, and that will show up as closed sales in July and August - so we should expect a further decline in existing home sales over the next few months.