June 2017 Headline Existing Home Growth Slows

The headline existing home sales growth slowed with the authors saying “Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget”. Our analysis of the unadjusted data agrees.

Analyst Opinion of Existing Home Sales

The rolling averages have been slowing in 2017 – so it is easy to agree with the NAR that this will not be excellent for home sales this year. We also agree with the NAR that price growth is straining budgets for buyers – and we wonder how the home affordability index is saying otherwise.

Econintersect Analysis

Unadjusted sales rate of growth decelerated 2.4 % month-over-month, up 3.3 % year-over-year – sales growth rate trend decelerated using the 3 month moving average.

Unadjusted price rate of growth accelerated 0.1 % month-over-month, up 4.9 % year-over-year – price growth rate trend decelerated using the 3 month moving average.

The homes for sale inventory contracted this month, remains historically low for Junes, and is down 7.1 % from inventory levels one year ago).

NAR reported:

Sales down 1.8 % month-over-month, up 0.7 % year-over-year.

Prices up 6.5 % year-over-year

The market expected annualized sales volumes of 5.500 M to 5.690 M (consensus 5.580 million) vs the 5.52 million reported.

The graph below presents unadjusted home sales volumes.

Here are the headline words from the NAR analysts:

Lawrence Yun, NAR chief economist, says the previous three-month lull in contract activity translated to a pullback in existing sales in June. “Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” he said. “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

Added Yun, “The good news is that sales are still running slightly above last year’s pace despite these persistent market challenges.”

“It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” said Yun. “Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year.”

“Prospective buyers who postponed their home search this spring because of limited inventory may have better luck as the summer winds down,” said President William E. Brown, a Realtor® from Alamo, California. “The pool of buyers this time of year typically begins to shrink as households with children have likely closed on a home before school starts. Inventory remains extremely tight, but patience may pay off in coming months for those looking to buy.”