August’s existing home sales broke a string of 4 consecutive m/m declines by remaining unchanged at + 5.34%with July’s sales figures. That being said, August’s existing home sales fell -1.5% when compared to the same time last year, according to the National Association of REALTORS® (NAR).
The first three quarters of 2018 have seen sales steadily slow.
Except for a two-month period in mid 2017, sales levels of existing homes stand at their lowest levels since 2015.
According to NAR’s chief economist, Aaron Terrazas, “It’s no buyer’s market yet, but this is the sixth consecutive y/y drop, the largest since August 2016, (and this trend) hints that one is on the far horizon.”
The median price of existing homes sold in August 2018 was $264,800, an increase of +4.6% compared with the same time last year. Inventory was unchanged from July 2018 with 1.92M homes for sale, up +2.7% compared with the same time last year.
Even though inventory supply remains tight, it is easing a bit. Inventory has even posted y/y increases in some markets so it’s difficult to continue blaming inventory as “…the culprit for home sale woes,” according to Terrazas.
On the contrary, Terrazas sees a combined effect of “…a thousand small things sapping the housing demand…” things like higher interest rates (from 4.33% on August 23 for a 30-year fixed mortgage loan to 4.51% on September 17) and tax changes that have eliminated homeownership givens, such as the cap of $10,000 on state, local and property taxes combined.”
The world of renter-ship also reversed its decades long growth in August. According to the US Census Bureau’s Homeownership and Housing Vacancy Study, rent appreciation slowed over the sixth straight month in August. Also, rental rates were flat y/y for the first time since 2012.
The world of new residential construction slowed in August 2018 as well. The South Atlantic District (Delaware, Florida, Georgia, Maryland, South Carolina and Washington DC) is leading a double digit percentage point decrease in new construction and is simultaneously leading the country in new home starts. The largest decrease in new home construction was in the East South Central District of the country.