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Monday, August 23, 2021

Comments on July Existing Home Sales

by Calculated Risk on 8/23/2021 01:11:00 PM

Earlier: NAR: Existing-Home Sales Increased to 5.99 million in July

Two key points:

1) Existing home sales are somewhat above pre-pandemic levels rate of around 5.5 million SAAR (average six months prior to pandemic). Seasonally adjusted (SA) sales for July 2021 were also the highest since 2006 - about 2% above July 2020. 

Some of the increase in sales over the previous year was probably related to  record low mortgage rates, strong second home buying, a strong stock market and favorable demographics.

Also, the delay in the 2020 buying season pushed the seasonally adjusted number to very high levels over the winter.   This means there are going to be some difficult comparisons in the second half of 2021!

2) Inventory is very low, and was down 12.0% year-over-year (YoY) in July.  Also, as housing economist Tom Lawler has noted, the local MLS data shows even a larger decline in active inventory (the NAR appears to include some pending sales in inventory). Lawler noted:
"As I’ve noted before, the inventory measure in most publicly-released local realtor/MLS reports excludes listings with pending contracts, but that is not the case for many of the reports sent to the NAR (referred to as the “NAR Report!”), Since the middle of last Spring inventory measures excluding pending listings have fallen much more sharply than inventory measures including such listings, and this latter inventory measure understates the decline in the effective inventory of homes for sale over the last several months."
It seems likely that active inventory is down close to 30% year-over-year.

Months-of-supply at 2.6 months is still very low, but above the record low of 1.9 months set in December 2020 and January 2021.  Inventory will be important to watch in 2021, see: Some thoughts on Housing Inventory

Existing Home Sales YoY Click on graph for larger image.

This graph shows existing home sales by month for 2020 and 2021.

The year-over-year comparison will be more difficult in the second half of the year.   

The second graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), since 2005.

Existing Home Sales NSA Sales NSA in July (584,000) were 2.2% below sales in July 2020 (597,000).  

There were fewer selling days in July 2021 than in July 2020, so the SA numbers were higher than last year, even though the NSA numbers were lower.

This was the second highest sales for July, NSA, since 2006.