Jack Dunn - Reclaiming Common Sense

The Existing Home Sales Data for July was released this morning. Let's talk more about the ESPN sports report Robert Lee instead of the economy. I am sorry, I watch business news to keep abreast of business sensitive data, not sports news. You read this column and my article on housing because you want to hear what is happening. The Realtors produce data that is seasonally adjusted. The media report on the report. The Realtors also provide non-seasonally adjusted data to the Federal Reserve Economic Division (FRED.) This column and this article are focused on the non-seasonally adjusted data.  The good news for home sellers is that the average sales price has been improving during the month of July since July 2011 and exceeds the average sales price of 2005, 2006, and 2007.  Let's dig into the data, remembering that this is a national perspective and that all real estate is local - down to the school district, neighborhood, and style of house or condominium.


The Number of Units Sold exceeded half a million. This level of July sales was identical to July 2016 and comparable to July 2013. WE have some data for years with sales below half a million units during July (2000, 2010, 2011, and 2012.) This column had projected sales in units comparable to 2015, so that is a bit of a disappointment. It also projected that the average sales price could exceed $300,000 for the first time and that a more realistic level would be between $297,000 and $304,000. It ended up at $298,800.


The Rolling Year Data came in at 5.529 Million units. We have sold over 5.5 million units during the past 12 months. This pace is faster than July 2002 and faster than July 2008 through July 2016.The Realtors have the annual rate of sales pegged at 5.44 million units - This would still be slower than the pace of sales during 2016. The data does not paint this picture.The rolling year sales are 3.65% ahead of where we were last year (5.529 million versus 5.335 million.) It is also slightly slower than where we were during July 2002 when we had a rolling year value of 5.498 million units


Current Year Sales exceed last year's sales by 2.46% - On Track for 5.6 Million Units. Last year we sold 5.452 million units. If we continue to see 2.46% growth then we could hit 5.586 Million units. Currently we are trending with the data from 2002 when we sold 5.631 million units. The current year prospect is higher than the rolling year prospect. This means that the sales are growing.


Record Low Inventory is Holding Back Existing Home Sales. We have the lowest July Inventory "on-record" going back to July 1999. If the inventory level is low (supply) and demand is rising, prices will continue to rise. If prices continue to rise then hesitant sellers may decide to sell their existing home and possible buy new homes.  The inventory level for July 2017 was a paltry 1.92 million units. We are past the peak inventory month of the year. Will inventory drop to below 1.50 million this December? last December we had 1.65 million units - we are 230,000 units lower now than we were during July 2016, so a 1.42 million level could be possible.


 We are doing better than we were during July 2016, which is better than July 2008, 2009, 2010, 2011, 2012, 2013, 2014, and 2015.If this were under a different administration it would be "Existing home sales on track for best year during the past decade."Sales prices continue to soar as inventory falls. Dollar volume is rising so commissions are rising. Remember that 2005 was the peak year for units sold, we are on track for a sales year comparable to 2002. We may set annual records by the time the 2020 election rolls around, The media has to double check the data. Sales did not drop on an annualized basis this month. We are growing sales in units and growing sales in sales price.


It's the economy.