Eye On Housing
Existing home sales, as reported by the National Association of Realtors (NAR), decreased 3.2% in July and were down 1.6% from the same month a year ago, the first year-over-year decline since November 2015. Total existing home sales in July decreased to a seasonally adjusted rate of 5.39 million units combined for single-family homes, townhomes, condominiums and co-ops, down from 5.57 million units in June.
July existing sales increased in the West by 2.5%, reflecting the June increase in the Pending Home Sales Index for that region. July existing sales fell from the previous month by 1.8% in the South, 5.2% in the Midwest and 13.2% in the Northeast. Year-over-year, the Midwest remained unchanged, while the West declined a slightly. The South and Northeast declined by 1.8% and 5.7% year-over-year.
Total housing inventory increased by 0.9% in July, but remains 5.8% lower than its level a year ago. At the current sales rate, the July unsold inventory represents a 4.7-month supply, compared to a 4.5-month supply in June.
The July all-cash sales share was 21%, the lowest share since November 2009. Individual investors purchased an 11% share in July, unchanged from June, and down from 13% a year ago. The first-time home buyer share was 32% in July, down from 33% in June.
The July median sales price of $244,100 was 5.3% above the same month a year ago, and represents the 53rd consecutive month of year-over-year increases. The median condominium/co-op price of $228,400 in July was up 4.1% from the same month a year ago.
NAR cited continuing low inventory as the reason for the considerable sales slump last month. The severely restrained inventory of existing homes has spurred new construction and new home sales as reported yesterday. Builder sentiment remains cautiously optimistic, brightening prospects for new single-family sales in 2016.
In my opinion, the real estate industry will never fully recover until the problem of the missing first-time buyer is addressed. In a normal market, 40% of the buyers are first-timers while they comprise barely 30% in today’s market. What baffles me is the NAHB, NAR and MBA do not seem to be interested in finding out what could be done to entice the missing first-time buyer into a market with record low interest rates. What happens when rate increase?