July 2017 Existing Home Sales

Existing home sales paralleled the new home market’s weakness in July 2017 according to data from the National Association of Realtors.  The sales pace declined 1.3 percent to 5.44 million units as the second half of this year started.  This decline follows June’s downwardly revised tally of minus -2.0 percent (originally -1.8 percent).  Notwithstanding the recent weakness, the year-over-year trend managed to improve to 2.1 percent compared to the downwardly revised count of 0.6 percent (originally 0.7 percent) in the prior period.

Regional data were mixed.  Starting with the positive areas, sales in the South increased 2.2 percent and are now 3.6 percent higher than a year earlier.  Out in the West, transactions jumped 5.0 percent and the year-ago tally also improved 5.0 percent.  Unfortunately, declines in the other parts of the nation were steep.  Midwest home sales fell 5.3 percent and are now only 1.6 percent higher than a year earlier.  Finally, Northeast transactions plummeted 14.5 percent, putting them 1.5 percent lower than in July 2016.

Inventory issues continued in the period.  The number of homes available for sale declined 1.0 percent in the period to 1.92 million units.  Compared to a year earlier, this is a drop of 9.2 percent.  Inventories have now fallen in 26 consecutive months.  Unsold inventory is a 4.2 month supply at the current sales pace, falling from 4.8 months a year ago. 

Mortgage rates are still very low but have risen in 2017.  According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed rate mortgage increased to 3.97 percent, up 0.07 percentage points versus June.  For added context, this rate averaged 3.65 percent in 2016. 

Homes that were put up for sale continued moving quickly.  A typical property stayed on the market for just 30 days in the period.  However, this is two days longer than in June.  Nonetheless, 51 percent of homes sold in July were on the market for less than a month. 

Housing has been fairly strong for several years, so the recent deceleration is not worth fretting over just yet.  In the months ahead, Atlas will pay attention to the year-over-year trend to see if it begins to weaken, suggesting something more serious might be afoot.  In the meantime, rates are low and transactions are happening quickly.  Declining volume could be short-lived, especially if a greater number of homes are embellished with For Sale signs in the months ahead.