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NAR: Existing-Home Sales Decreased to 4.81 million SAAR in July
From the NAR: Existing-Home Sales Retreated 5.9% in July
Existing-home sales sagged for the sixth straight month in July, according to the National Association of REALTORS®. All four major U.S. regions recorded month-over-month and year-over-year sales declines.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year-over-year, sales fell 20.2% (6.03 million in July 2021).
Total housing inventory registered at the end of July was 1,310,000 units, an increase of 4.8% from June and unchanged from the previous year. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 2.9 months in June and 2.6 months in July 2021.
The sales rate was below the consensus forecast.
This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in July (4.81 million SAAR) were down 5.9% from the previous month and were 20.2% below the July 2021 sales rate. Sales are now below pre-pandemic levels and, excluding the pandemic decline, sales are 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 20.2% year-over-year compared to June 2021. This was the eleventh 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 July (453,000) were 22.4% below sales in July 2021 (584,000). Sales NSA year-to-date are down 10.3% 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 1.31 million in July from 1.25 million in June.
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 July compared to July 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 July than the NAR is reporting.
Months of supply (red) increased to 3.3 months in July from 2.9 months in June.
Median House Price Growth Slowing
On prices, the NAR reported:
The median existing-home price for all housing types in June was $403,800, up 10.8% from July 2021 ($364,600), as prices increased in all regions. This marks 125 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 July was smaller than in June and suggests the Case-Shiller index will start showing slower growth soon. Note that the median price usually starts falling seasonally in July, so the 2% decline from June to July in the median price was partially seasonal.
Key point on Timing of Sales
Existing home sales are reported when the transaction closes. Sales in July were mostly for contracts signed in June and July. 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 next month.
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