econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 20 September 2017

August 2017 Headline Existing Home Growth Slows Again

Written by Steven Hansen

The headline existing home sales growth slowed with the authors saying "What's ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it's putting on prices in several parts of the country". Our analysis of the unadjusted data agrees.

Analyst Opinion of Existing Home Sales

The rolling averages have been slowing in 2017 - so it is easy to agree with the NAR that this will not be excellent for home sales this year. We also agree with the NAR that price growth is straining budgets for buyers - and we wonder how the home affordability index is saying otherwise.

Econintersect Analysis

  • Unadjusted sales rate of growth decelerated 0.7 % month-over-month, down 0.7 % year-over-year - sales growth rate trend decelerated using the 3 month moving average.
  • Unadjusted price rate of growth decelerated 0.4 % month-over-month, up 4.5 % year-over-year - price growth rate trend decelerated using the 3 month moving average.
  • The homes for sale inventory contracted significantly this month, remains historically low for Julys, and is down 6.5 % from inventory levels one year ago).

NAR reported:

  • Sales down 1.7 % month-over-month, up 0.2 % year-over-year.
  • Prices up 5.6 % year-over-year
  • The market expected annualized sales volumes of 5.350 M to 5.550 M (consensus 5.480 million) vs the 5.35 million reported.

The graph below presents unadjusted home sales volumes.

Here are the headline words from the NAR analysts:

Lawrence Yun, NAR chief economist, says the slump in existing sales stretched into August despite what remains a solid level of demand for buying a home. "Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales," he said. "What's ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it's putting on prices in several parts of the country. Sales have been unable to break out because there are simply not enough homes for sale."

Added Yun, "Some of the South region's decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area. Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma. However, nearly all of the lost activity will likely show up in 2018."

According to President William E. Brown, a Realtor® from Alamo, California, the housing market continues to recover from the depths of the financial crisis. However, the significant household wealth many homeowners have accumulated in recent years through rising home values could be at risk if any of the proposed tax provisions follow through with attempts to marginalize the mortgage interest deduction and eliminate state and local tax deductions.

"Consumers are smart and know that any attempt to cap or limit the deductibility of mortgage interest is essentially a tax on homeownership and the middle class," said Brown. A study commissioned by NAR(link is external) found that under some tax reform proposals, many homeowners with adjusted gross incomes between $50,000 and $200,000 would see an average tax increase of $815, along with home values shrinking by an average of more than 10 percent. An even steeper decline would be seen in areas with higher property and state income taxes. Congress must keep homeowners in mind as it looks towards tax reform this year."

To remove the seasonality in home prices, here is a year-over-year graph which demonstrates a general improvement in home price rate of growth since mid-2012.

Econintersect does a more complete analysis of home prices with the Case-Shiller analysis.

The home price situation according to the NAR:

The median existing-home price for all housing types in August was $253,500, up 5.6 percent from August 2016 ($240,000). August's price increase marks the 66th straight month of year-over-year gains.

According to the NAR;

First-time buyers were 31 percent of sales in August, which is down from 33 percent in July and is the lowest share since last August (also 31 percent). NAR's 2016 Profile of Home Buyers and Sellers - released in late 20164 - revealed that the annual share of first-time buyers was 35 percent.

All-cash sales were 20 percent of transactions in August, up from 19 percent in July but down from 22 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in August, up from 13 percent in July and 12 percent a year ago.

Unadjusted Inventories are below the levels of one year ago.

Total housing inventory at the end of August declined 2.1 percent to 1.88 million existing homes available for sale, and is now 6.5 percent lower than a year ago (2.01 million) and has fallen year-over-year for 27 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.5 months a year ago.

Caveats on Use of NAR Existing Home Sales Data

The National Association of Realtors (NAR) is a trade organization. Their analysis tends to understate the bad, and overstate the good. However, the raw (and unadjusted) data is released which allows a complete unbiased analysis. Econintersect analyzes using the raw data. Also note the National Association of Realtors (NAR) new methodology now has moderate back revision to the data - so it is best to look at trends, and not get too excited about each month's release.

Econintersect determines the month-over-month change by subtracting the current month's year-over-year change from the previous month's year-over-year change. This is the best of the bad options available to determine month-over-month trends - as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).



>>>>> Scroll down to view and make comments <<<<<<



Permanent link to most recent post on this topic

Click here for Historical Releases Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.






Econintersect Economic Releases








search_box
Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.







Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved