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Tuesday, September 30, 2014

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

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Sales of new single-family homes in August rose by 77,000 units (18.0 percent) relative to the previous month, to a seasonally adjusted and annualized rate (SAAR) of 504,000. Sales in August were 32.3 percent above year-earlier levels. Meanwhile, the median price of new homes sold fell (by $4,500 or -1.6 percent) to $275,600. Because single-family starts decreased while sales rose, the three-month average ratio of starts to sales dropped to 1.41. Click here for our post on August’s housing permits, starts and completions. 
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Single-unit completions fell by 53,000 units (-8.2 percent) in August. Nonetheless, new-home inventory expanded in absolute terms (+2,000 units) but shrank in months-of-inventory terms (-0.8 month). 
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Existing home sales retreated in August, by 90,000 units (-1.8 percent) to 5.05 million units (SAAR). With sales of new homes rising but existing homes falling, the share of total sales comprised of new homes jumped to 9.1 percent. The median price of previously owned homes sold in August dropped again (by $1,800 or -0.8 percent) to $219,800. Inventory of existing homes inched lower in absolute terms (-40,000 units) but was unchanged in months-of-inventory terms. 
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Housing affordability nudged down again in July, to its lowest level since November 2008, because the median price of existing homes for sale rose by $900 to $223,900. Concurrently, Standard & Poor’s reported that the newly published U.S. National Index in the S&P/Case-Shiller Home Price indices posted a not-seasonally adjusted monthly change of +0.5 percent in July (+5.6 percent relative to a year earlier).
“The broad-based deceleration in home prices continued in the most recent data,” said David Blitzer, Chair of the Index Committee at S&P Dow Jones Indices. “However, home prices continue to rise at two to three times the rate of inflation. The slower pace of home price appreciation is consistent with most of the other housing data on housing starts and home sales. The rise in August new home sales -- which are not covered by the S&P/Case-Shiller indices -- is a welcome exception to recent trends.
“While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years. The National Index rose 0.5%, its seventh consecutive increase. At the bottom was San Francisco with its first decline this year and the only city in the red. New York tended to underperform over the past few years but it was on top for the last two months.” 
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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.

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