August 2017 Existing Home Sales

Transaction volume slowed in the existing homes market during the month of August 2017 according to the National Association of Realtors.  Declining 1.7 percent, there were 5.35 million units sold on an annualized basis, down from 5.44 million in July.  Compared to a year earlier, transactions gained just 0.2 percent, the slowest pace since August 2016.

Regional data were mixed and probably impacted by weather.  On the positive side, Northeast sales increased 10.8 percent and are now 1.4 percent higher than a year ago.  Midwest purchases increased 2.4 percent and are 0.8 percent greater than 12 months earlier.  Unfortunately, the two largest regions experienced declining volumes.  Sales in the West fell 4.8 percent but managed to stay 0.8 percent higher than in the same period of 2016.  Even worse, transactions in the South (the largest region) declined 5.7 percent and have fallen 0.9 percent in the past year.  Of course, hurricanes along the Gulf Coast hurt purchases in the South and are likely to do so for some time.

Housing inventory fell.  Declining 1.2 percent, there are now just 1.88 million existing homes for sale.  Year-over-year inventory data continues to weaken as it is 6.5 percent lower and has now declined for 27 consecutive months. 

Interest rates fell to the lowest level since November 2016.  According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to 3.88 percent from 3.97 percent in July.  For some context, the average commitment rate for all of 2016 was 3.65 percent. 

This segment of the economy has been decelerating for a while and the extreme weather in the South did not help.  There is a growing chance that this indicator will struggle for the remainder of the year as the season changes and the Gulf Coast recovers.  Fortunately, this is not a large contributor to our nation’s output on its own, but it does have knock-on effects which could impact Americans in a variety of jobs.