June 2014 U.S. Home Sales, Inventory and Prices

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Sales of new single-family homes tumbled by a seasonally adjusted and annualized rate (SAAR) of 36,000 units (-8.1 percent), to 406,000 in June. That decline was in addition to the largest-ever downward revision (from 504,000 to 442,000 units, or 12.3 percent) applied to May’s sales. Sales in June were 11.6 percent below year-earlier levels. Meanwhile, the median price of new homes sold fell (by $9,100 or 3.2 percent) to $273,500. Because single-family starts dropped more quickly than sales, the three-month average starts-to-sales ratio retreated to 1.48 (from 1.53). Click here for our post on June’s housing permits, starts and completions. 

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Single-unit completions retreated (-41,000 units or 6.5 percent) in June. Even so, new-home inventory expanded in both absolute and months-of-inventory terms (6,000 units or 0.6 month). 

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Existing home sales advanced in June, by 130,000 units (2.6 percent) to 5.04 million units (SAAR). The share of total sales comprised of new homes fell to 7.5 percent. The median price of previously owned homes sold in June rose (by $11,300 or 5.3 percent) to $223,300. Inventory of existing homes jumped in absolute terms (+50,000 units) but was unchanged in months-of-inventory terms. 

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Housing affordability dipped further in May because the median price of existing homes for sale rose by $12,600 to $213,600. Concurrently, Standard & Poor’s reported that the 20-City Composite in the S&P/Case-Shiller Home Price indices posted a not-seasonally adjusted monthly change of +1.1 percent in May (+9.3 percent relative to a year earlier).

“Home prices rose at their slowest pace since February of last year,” observed David Blitzer, Chair of the Index Committee at S&P Dow Jones Indices. “The 10- and 20-City Composites posted just over 9 percent, well below expectations. Month-to-month, all cities are posting gains before seasonal adjustment; after seasonal adjustment 14 of 20 were lower” (emphasis added).

“Year-over-year, nine cities -- Las Vegas (16.9%), San Francisco (15.4%), Miami (13.2%), San Diego (12.4%), Los Angeles (12.3%), Detroit (11.9%), Atlanta (11.2%), Tampa (10.2%) and Portland (10.0%) -- posted double-digit increases in May 2014. The Sun Belt continues to lead with seven of the top eight performing cities. Eighteen of 20 cities had lower year-over-year numbers than last month; San Francisco and San Diego saw their year-over-year figures decelerate by about three percentage points.

“Housing has been turning in mixed economic numbers in the last few months. Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag. At the same time, the broader economy and especially employment are showing larger improvements and substantial gains.” 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.