Wednesday, August 22, 2018

A Few Comments on July Existing Home Sales

by Bill McBride on 8/22/2018 11:59:00 AM

Earlier: NAR: Existing-Home Sales Decline in July

A few key points:

1) This is a reasonable level for existing home sales, and doesn't suggest any significant weakness in housing or the economy. The key for the housing - and the overall economy - is new home sales, single family housing starts and overall residential investment.

2) Inventory is still very low, but was unchanged year-over-year (YoY) in July. Inventory for June was initially reported as up slightly year-over-year, but inventory was revised down. Following 37 consecutive months with a year-over-year decline in inventory, inventory was unchanged (a first since June 2015).

3) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus. See: Lawler: Early Read on Existing Home Sales in July.   The consensus was for sales of 5.43 million SAAR, Lawler estimated the NAR would report 5.40 million SAAR in July, and the NAR actually reported 5.34 million.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Existing Home Sales NSAClick on graph for larger image.

Sales NSA in July (522,000, red column) were  above sales in July 2017 (513,000, NSA).

Sales NSA through July (first seven months) are down about 1.6% from the same period in 2017.

This is a small YoY decline in sales to-date - but it is possible there has been an impact from higher interest rates and / or the changes to the tax law (eliminating property taxes write-off, etc).