Jack Dunn - Reclaiming Common Sense

Another Month, Another Existing Home Sales Report, another report ignored.

This column on Monday wrote an article with an optimistic out look for the new home construction data, the new home sales data, and the existing home sales data. Yesterday the new home construction data was released, and it showed strengthening New Construction Activity. Starts, under construction, and completions were all up from last year, and all were the best August since August 2008. Today the Realtors released their monthly sales report and the Federal Reserve Published the data. There was only one revision made to the prior months' data. The Realtors do not seem to have the same beliefs as this column with regard to where we are heading. They feel that we are on track for 5.35 million units to be sold this year, down from last month's rate of 5.44 million. This column still sees 5.6 million as a possibility.

The Average Sales Price for August Hit a New Record. The average sales price ticked higher, as projected, just falling short of $300,000 at $294,600. The average sales price has been rising since 2010. The good news here is that those who bought homes prior to the recession may have the ability to move now that the average sales price is nearly $30,000 higher than the pre-recession August Peak of $270,300.

The number of units sold dropped slightly from the August 2016 level. The non-seasonally adjusted units sold dropped from 539,000 to 535,000 units, August to August.  This level is close to the 2002 August level of 549,000 units and is more than has been sold during the month of August from 2007 through 2014.

Lowest Level of August Inventory since 1999. There were 1.88 million units available during August. The lowest level available for August was August 1999 and August of 2000 when 2.02 million units were available.  The low inventory level has been discussed numerous times on this website since last year.

There have been 5.525 million units sold during the past 12 months. The "Rolling Year" data indicates where we have been. The level recorded this month is slightly faster than where we were during August of 2002 when 5.481 million units were sold. This August pace was slightly slower than 2003 where we saw 5.935 million units sold during the prior twelve months.

On Track for more sales than 2016, possibly 2002. We saw a total of 5.452 million units sold during all of 2016. We saw 5.631 million units sold during all of 2002.The current year data is trending at a higher level than the rolling year data which indicates that he annual sales rate is improving. The 2017 data is almost retracing the levels recorded during 2002 The big question here, as with the other economic reports with which this column works: "What will the impacts of Hurricanes Harvey and Irma be?" Were homes that were under contract or listed impacted by the storms? Did sales fall apart after massive damage was incurred? Will people who were purchasing new homes shift to existing homes? Time will tell.

The data was good, not great. Month after month it appears that the main thing holding back existing home sales is the lack of inventory. If you list it they may come. Remember, all real estate is local. This column examines data from the national level. You need someone with expertise in your community, and must remember that the data is local and time sensitive. Conditions may be different for your school district, neighborhood, condominium, style of home, size of units, and age of property.

The trend looks like we could continue to build upon  this slow improvement Inventory is going to be an issue for months to come. The law of Supply and Demand "dictates" that if supply is low and demand is high then prices will rise. If prices rise "too much" then demand may falter.  Another month, another Existing Home Sales Report, and  another report ignored. Ignore at your own risk.

It's the economy.