July 2017 Headline Existing Home Growth Slows Again

The headline existing home sales growth slowed with the authors saying “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month”. 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 0.3 % month-over-month, up 0.0 % year-over-year – sales growth rate trend decelerated using the 3 month moving average.

Unadjusted price rate of growth accelerated 0.2 % month-over-month, up 4.9 % year-over-year – price growth rate trend decelerated using the 3 month moving average.

The homes for sale inventory contracted this month, remains historically low for Julys, and is down 9.0 % from inventory levels one year ago).

NAR reported:

Sales down 1.3 % month-over-month, up 2.1 % year-over-year.

Prices up 6.2 % year-over-year

The market expected annualized sales volumes of 5.490 M to 5.650 M (consensus 5.570 million) vs the 5.51 million reported.

The graph below presents unadjusted home sales volumes.

Here are the headline words from the NAR analysts:

LawrenLawre, NAR chief economist, says the second half of the year got off on a somewhat sour note as existing sales in July inched backward. “Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” he said. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.”

“Home prices are still rising above incomes and way too fast in many markets,” said Yun. “Realtors® continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”

“July was the fourth consecutive month that the typical listing went under contract in under one month,” said Yun. “This speaks to the significant pent-up demand for buying rather than any perceived loss of interest. The frustrating inability for new home construction to pick up means inadequate supply levels will keep markets competitive heading into the fall.”

According to President William E. Brown there’s a prominent misconception – especially among non-homeowners – that a down payment of at least 20 percent is needed to buy a home. “Every month this year, roughly 60 percent of buyers who financed their purchase with a mortgage made a down payment that was 6 percent or less5,” he said. “Potential buyers with solid employment and manageable levels of debt will find that there are mortgage options available. Talk to a lender to find out what you qualify for based on your savings and let that guide you as you begin your home search with a Realtor®.”