RSS Feed by Calculated Risk on 9/22/2014 04:07:00 PM
Monday, September 22, 2014
Lawler: Existing Home Sales Eased in August; NAR Bogusly Blames Monthly Dip on “Retreat” by “All Cash” Investors
From housing economist Tom Lawler:
In today’s existing home sales report, the National Association of Realtors estimated that US existing home sales ran at a seasonally adjusted annual rate of 5.05 million, down 1.8% from July’s downwardly-revised (to 5.14 million from 5.15 million), and down 5.3% from last August’s pace. The NAR’s estimate was slightly lower than my below-consensus projection based on regional tracking. The NAR also estimated that the number of existing homes for sale at the end of August was 2.31 million, down 1.7% from July’s downwardly-revised (to 2.35 million from 2.37 million) but up 4.5% from last August. The NAR’s inventory estimate was also slightly lower than my projection based on regional tracking. Finally, the NAR estimated that the median existing home sales price last month was $219,800, up 4.8% from last August, and that the median existing SF home sales price was $220,600, up 5.2% from a year ago. This YOY increase was higher than my projection based on regional tracking.
In what I thought was a “strange” press release, the NAR attributed the drop in sales last month to a retreat from the market by “investors paying in cash.” This attribution was based on the results of the NAR’s monthly survey of a relatively small number (in terms of respondents1) of realtors, who are asked about the characteristics of the buyer for the realtor’s last transaction in a month. The results of this survey often do not match trends in the market as a whole. Here are some selected results of the August survey compared to the July survey and last August’s survey.
| Share of Existing Home Sales based on NAR Survey of Realtors* | |||
|---|---|---|---|
| Aug-14 | Jul-14 | Aug-13 | |
| All Cash | 23% | 29% | 32% |
| "Individual" Investor | 12% | 16% | 17% |
| First-Time Home Buyer | 29% | 29% | 28% |
| Foreclosure | 6% | 6% | 8% |
| Short Sales | 2% | 3% | 4% |
| *Based on last transaction in month | |||
In the first quarter of 2014 the NAR survey suggested that the all-cash share of home sales was noticeably higher than in the first quarter of 2013, even though other reports (based on property records) and local realtor/MLS reports suggested otherwise. While these other reports do suggest that the all-cash share of sales over the last few months is down significantly from a year ago, they don’t suggest that the all-cash share plunged in August relative to July (first table below). The survey’s distressed-sales share also looks way too low (second table below).
| All-Cash Share | Monthly Change | ||
|---|---|---|---|
| Aug-14 | Jul-14 | ||
| Las Vegas | 32.1% | 35.6% | -3.5% |
| Phoenix | 25.2% | 24.8% | 0.4% |
| Sacramento | 20.2% | 20.9% | -0.7% |
| Mid-Atlantic (MRIS) | 17.5% | 17.1% | 0.4% |
| Orlando | 42.1% | 39.6% | 2.5% |
| Bay Area CA* | 21.8% | 20.2% | 1.6% |
| So. California* | 24.4% | 24.5% | -0.1% |
| Florida SF | 38.7% | 37.7% | 1.0% |
| Florida C/TH | 64.7% | 64.3% | 0.4% |
| Toledo | 32.2% | 32.9% | -0.7% |
| Wichita | 25.7% | 28.0% | -2.3% |
| Des Moines | 16.0% | 15.1% | 0.9% |
| Peoria | 21.3% | 18.4% | 2.9% |
| Tucson | 26.0% | 26.2% | -0.2% |
| Omaha | 18.3% | 17.0% | 1.3% |
| Georgia*** | 26.8% | 24.1% | 2.7% |
| NAR Survey | 23.0% | 29.0% | -6.0% |
| Short Sales Share | Foreclosure Sales Share | Total "Distressed" Share | All Cash Share | |||||
|---|---|---|---|---|---|---|---|---|
| Aug-14 | Aug-13 | Aug-14 | Aug-13 | Aug-14 | Aug-13 | Aug-14 | Aug-13 | |
| Las Vegas | 11.5% | 25.0% | 8.9% | 8.0% | 20.4% | 33.0% | 32.1% | 52.5% |
| Reno** | 8.0% | 21.0% | 4.0% | 5.0% | 12.0% | 26.0% | ||
| Phoenix | 3.6% | 10.3% | 6.6% | 8.9% | 10.3% | 19.3% | 25.2% | 34.1% |
| Sacramento | 5.4% | 4.8% | 6.4% | 14.6% | 11.8% | 19.4% | 20.2% | 25.4% |
| Minneapolis | 2.5% | 5.5% | 8.1% | 15.2% | 10.6% | 20.7% | ||
| Mid-Atlantic | 4.1% | 7.6% | 8.9% | 7.0% | 13.0% | 14.6% | 17.5% | 17.5% |
| Orlando | 7.1% | 17.2% | 25.8% | 16.7% | 32.9% | 33.9% | 42.1% | 46.0% |
| California * | 6.0% | 11.4% | 5.4% | 7.8% | 11.4% | 19.2% | ||
| Bay Area CA* | 3.8% | 7.6% | 2.9% | 4.3% | 6.7% | 11.9% | 21.8% | 23.7% |
| So. California* | 5.9% | 11.5% | 5.0% | 7.0% | 10.9% | 18.5% | 24.4% | 28.4% |
| Florida SF | 6.1% | 12.4% | 21.2% | 17.2% | 27.3% | 29.6% | 38.7% | 41.4% |
| Florida C/TH | 4.3% | 9.9% | 19.2% | 15.5% | 23.5% | 25.4% | 64.7% | 67.9% |
| Hampton Roads | 18.6% | 21.0% | ||||||
| Northeast Florida | 33.3% | 36.7% | ||||||
| Toledo | 32.2% | 30.1% | ||||||
| Wichita | 25.7% | 28.1% | ||||||
| Des Moines | 16.0% | 16.6% | ||||||
| Peoria | 21.3% | 20.8% | ||||||
| Tucson | 26.0% | 33.4% | ||||||
| Omaha | 18.3% | 17.0% | ||||||
| Georgia*** | 26.8% | N/A | ||||||
| Memphis* | 11.7% | 16.5% | ||||||
| *share of existing home sales, based on property records **Single Family Only ***GAMLS | ||||||||
1 The NAR says that it sends the monthly survey to about 50,000 real estate practitioners. Response rates vary significantly, but typically the NAR gets a little over 3,000 usable responses a month. The August results were based on 3,360 usable responses.
