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Friday, September 18, 2020

Lawler: Early Read on Existing Home Sales in August

by Calculated Risk on 9/18/2020 02:42:00 PM

From housing economist Tom Lawler:

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.92 million in August, up 1.0% from July’s preliminary pace and up 9.0% from last August’s seasonally adjusted pace. Unadjusted sales should show a smaller YOY increase, reflecting this August’s lower business day count relative to last August’s.

Local realtor/MLS data suggest that the median US existing single-family home sales price last month was up by a steamy 11.6% from last August, partly boosted by the mix of home sales but mainly boosted by the lack of available inventory across much of the country combined with strong demand for SF detached homes.

While not all realtor reports include data on new pending sales – and some that do often revise those data significantly – the limited data available suggest that the YOY increase in pending sales again exceeded the YOY gain in closed sales last month.

Projecting the NAR’s inventory estimate for August is tricky. Local realtor/MLS reports suggest that the “inventory” of homes for sale last month was down by about 35% nationwide in August. However, those same local reports for July would have suggested a much sharply YOY drop in inventories than the NAR reported.

Most of these local realtor/MLS reports utilize third-party software, and most exclude all pending contracts from their inventory number. These reports differ from the reports sent to the NAR, and it is my understanding is that most local realtors/MLS include pending listings in the inventory number in their NAR report.
Given both the sales and inventory numbers, it’s perhaps not shocking that there has been a rapid acceleration in home prices over the past few months – to the point that one can at least say the single-family housing market has become “frothy,” and perhaps even become a little “bubbly.”

If in fact the recent surge in median sales prices reflects a jump in overall prices (rather than a shift in the mix in sales), it will not show up in some widely followed “repeat-transactions) home price indexes for a few months.

CR Note: The National Association of Realtors (NAR) is scheduled to release August existing home sales on Tuesday, September 22, 2020 at 10:00 AM ET. The consensus is for 6.00 million SAAR.