Existing Home Sales have been held back by a Lack of Inventory since 2015
Average sales prices have been climbing steadily since 2011
The existing home sales market is the largest part of the real estate sales market. Where we are thinking that there may be 50,000 to 59,000 new home sales this month, that would be less than 10% of what is expected from the existing home sales market.
The inventory level could rise or fall month to month and from August to August. Inventory could fall by 4% month to month and 3% August to August. Inventory. This could be the difference of plus or minus 40,000 units from last month's level of 1.904 million units, non-seasonally adjusted.
The number of units sold could rise or fall month to month and August to August. There are some times when the Labor Day holiday is a good weekend for people to move. Some place have school start after the Labor Day Weekend. We saw more non-seasonally adjusted existing homes sold during August than July during 2016, 2017, and 2018. last month we had 523,800 units sold. last August we had 539,000 units sell, condominiums and single family homes, combined. The month to month data and the August to August data overlap between 523,000 and 544,000 units. If the units changed increase at all month to month or August to August then we will have over 540,000 units sold.
The current year data has us at 3.062 million units. We are trending between the 2017 and 2018 sales levels. We are also trending with the July year to date sales levels for 1999, 2001, and 2015. If we sell as many units as we did during those three years, 529,000 units, 566,000 units, and 504,000 units, respectively, 539,000 is a distinct possibility. We rarely sell 540,000 units or more during August, basically only during 2003-2006.
The average sales price could drop from July's level of $317,100 and rise from last August's level of $305,500. This is yet another example of down is up. Shelter costs have been rising by over 3% all year. If we grow by 2.8% then we will set an August record at $314,000 and drop below the July level of $317,000. The overlap is between $310,000 and $316,000 or roughly $313,000.
Expect the data to show non-seasonally adjusted decreases month to month and increases August to August for the Existing Home Market. Watch the inventory level.
It's the Economy.
The August New Home Data projects the best August since 2007
The August Existing Home Sales Data
There are three reports regarding the real estate industry that this column covers: The new home construction report, the new home sales report, and the existing home sales report. This year the new home starts had been slowing while the completions have been growing. Units under construction have been strengthening for years. New Home sales have been picking up pace. Existing Home sales are seeing inventory rise from record or new record lows, opening the opportunity for increased existing home sales.
New Home starts bottomed during 2011 and have been growing since that time. We are still nowhere near the single family start levels recorded during the 1980s, 1990s and early 2000s. It is likely that the Starts level will drop from the non-seasonally adjusted level of 85,000 units. It is also probable that the start level will rise from the 2018 level. The current year data indicates that we are we are tracking between the 2017 level and the 2018 level for starts. This means that we should see between 80,000 and 83,000 units started. A considerable amount of information has been flying around regarding the slowing starts levels. New home starts tend to peak during May. We saw our best month of the year during July.
Units under construction have been rising since 2012. We are approaching levels not seen since 2006 and 2007. The units under construction level had been growing a a double digit pace. That annual rate has been slowing lately, possibly to avoid a case of oversupply. The month to month data indicates that even with a minor drop in units that we would be well above the 1.414 million units we had last August. It is likely that we will have 1.6 million or more units under construction.
This has been the "year of completions." Completions spiked last August. The month to month data indicates that there could be a slight drop from the July level of 108,000 units. The annual data indicates that we could see a jump from last year's 118,000. There is an overlap between the month to month and August to August growth between 118,000 and 121,000 units. The current year data is indicating that this is the best year for completions since 2007 as we approach 920,000 to 925,000 units for the year to date.
The new construction data feeds into the new home sales data. We have had slower than normal, faster than the past decade, levels of new home sales this year. We need inventory to maintain those levels of sales. There was concern that we were below 300,000 units for a prolonged period of time. Now we are approaching 350,000 units. A level between 350,000 and 375,000 appears to be proper.
New Home Inventory is expected to remain unchanged or grow slightly. The month to month growth indicates a value between 335,000 and 345,000 units. The annual growth rate indicates a range of 354,000 to 377,000. When the month to month growth rate is not in sync with the annual growth rate the monthly growth rate tends to dictate. We could expect a slight growth back into the 349,000 level.
New Home sales have been knocking on the 50,000 unit level the past three years. The past three years of non-seasonally adjusted August new home sales have been steady between 45,000 and 47,000 units, with lower inventory levels. Last year we had 47,000 units sold. the annual data is indicating a 2% to 5% pop this year, or roughly 48,000 to 49,000 units. The monthly growth rate, from July to August, is projecting a swing of plus or minus 7% or between 49,000 and 57,000.
The current year sales level are higher than all of the years between 2008 and 2018, inclusively. We have seen more sales through the month of July than we saw through July 2008, July 2009, all the way through to July 2018. We are in our best new home sales year during the past 11 years. We are trending with the current year sales paces of 1988 and 1994. If we match those sales levels then we could see 59,000 units sold, as we did during those two August Sales Periods. What all of this means is that we should have our best August since 2007. It means that we are unlikely to match the August 2007 level of sales of 60,000 units. It means that we should see a value between 50,000 and 59,000 units sold.
We could set another August Average Sales Price Record. We have seen some months this year where a new average sales price record was set and other where the average sales price dropped from last year's value for the same month. Shelter costs have been rising at over 3% a year every month this year. This means that we should see the new home sales price jump by at least 3%. There is the possibility, based on the month to month changes that we could drop below last year's $380,900 and drop to $376,360. There is also the probability of an increase of 3% to $399,600. This means that a $400,000 New Home Average Sales Price is a distinct possibility.
New Home construction feeds into new home sales. This has been "the year of the completions." This has been a period of time where existing home inventory has not been strong. Existing home inventory has been dropping same month to same month since 2015. It is possible that some of the month to month drops in average sales price are a result of some builders attempting to reduce their new home prices to a level closer to existing home sales list prices. If we see the completions level pop, as expected, then this could be could for either this month's sales data.
New home sales have a synergistic impact on the rest of the economy. New homes need new appliances, and often "need" new furniture, new electronics, new home and garden equipment, and sometimes a new car for the new garage. New home construction also requires construction builders, retail sales people in the home and garden sector and other sectors. last month there was a massive upward revision to the June sales data that skewed the annualized rate of sales much higher than was originally reported. Peak annualized sales normally hits during March, sometimes April.
Will anybody else report that we are having our best new home sales year since 2007 if we have our best new home sales year since 2007? All of this data is non-seasonally adjusted. Watch the revisions. Watch the non-seasonally adjusted data.
It's the Economy.
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