by Bill McBride on 9/21/2015 12:31:00 PM
Monday, September 21, 2015
I've been expecting that the seasonally adjusted pace for existing home sales would slow due to limited inventory and higher prices. Maybe this is the beginning of that slowdown.
However, it is important to remember that new home sales are more important for jobs and the economy than existing home sales. Since existing sales are existing stock, the only direct contribution to GDP is the broker's commission. There is usually some additional spending with an existing home purchase - new furniture, etc - but overall the economic impact is small compared to a new home sale.
So some slowing for existing home sales (if it continues) would not be a big deal for the economy.
Even though inventory was up a little month-to-month, Inventory is still very low (down 1.7% year-over-year in August). More inventory would probably mean smaller price increases and slightly higher sales, and less inventory means lower sales and somewhat larger price increases.
Note: I'm still hearing reports of rising inventory in some mid-to-higher priced areas. However many low priced areas still have little inventory.
Also, the NAR reported distressed sales declined a little further year-over-year:
Matching the lowest share since NAR began tracking in October 2008, distressed sales — foreclosures and short sales — remained at 7 percent in August for the second consecutive month; they were 8 percent a year ago. Five percent of August sales were foreclosures and 2 percent were short sales.The following graph shows existing home sales Not Seasonally Adjusted (NSA).
Click on graph for larger image.
Sales NSA in August (red column) were higher than in August 2014, but below the level of August 2013 (NSA).
• Existing Home Sales in August: 5.31 million SAAR