Existing-Home Sales: Lost Momentum in July, YoY Now Negative
August 24, 2016
by Jill Mislinski
This morning's release of the July Existing-Home Sales decreased from the previous month to a seasonally adjusted annual rate of 5.39 million units from 5.57 million in June. The Investing.com consensus was for 5.51 million. The latest number represents a 3.2% decrease from the previous month and a 1.6% decrease year-over-year.
Here is an excerpt from today's report from the National Association of Realtors.
Lawrence Yun, NAR chief economist, says existing sales fell off track in July after steadily climbing the last four months. "Severely restrained inventory and the tightening grip it's putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month," he said. "Realtors® are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows."
Adds Yun, "Furthermore, with new condo construction barely budging and currently making up only a small sliver of multi-family construction, sales suffered last month as condo buyers faced even stiffer supply constraints than those looking to purchase a single-family home." [Full Report]
For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2013. It can be found here.
Over this time frame we clearly see the Real Estate Bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the Great Recession. The latest estimate puts us back to the general level around the turn of the century.
The Population-Adjusted Reality
Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 16.7% increase in the US population since the turn of the century. The snapshot below is an overlay of the NAR's annualized estimates with a population-adjusted version.
Existing-home sales are 3.1% above the NAR's January 2000 estimate. The population-adjusted version is 10.7% below the turn-of-the-century sales.
For additional perspectives on residential real estate, here is the complete list of our monthly updates: