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Sales of new
single-family houses in July 2017 were at a seasonally adjusted annual rate (SAAR)
of 571,000 units (610,000 expected).
This is 9.4% (±12.9%)* below the revised June rate of 630,000 (originally
610,000 units) and 8.9% (±15.4%)* below the July 2016 SAAR of 627,000; the
not-seasonally adjusted year-over-year comparison (shown in the table above)
was -9.3%. For a longer-term perspective, sales were 58.9% below the “housing
bubble” peak and 6.3% below the long-term, pre-2000 average.
The
median sales price of new houses sold in July 2017 was $313,700 (+$2,100 or 0.7%
MoM). The average sales price was $371,200 (-$1,200 or 0.3% MoM). Starter homes
(defined here as those priced below $200,000) comprised 16.3% of the total
sold, down from July 2016’s 18.5%; prior to the Great Recession starter homes represented
as much as 61% of total new-home sales. Homes priced below $150,000 made up 2.0%
of those sold in July, a proportion nearly half that of a year earlier (3.7%).
* 90% confidence interval includes zero.
The Census Bureau does not have sufficient statistical evidence to conclude
that the actual change is different from zero.
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As
mentioned in our post
about housing permits, starts and completions in July, single-unit completions fell
by 13,000 units (-1.6%). Because the decrease in completions was eclipsed by that
of sales, new-home inventory expanded in both absolute (+4,000 units) and months-of-inventory
terms (+0.6 month).
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Existing home sales
fell by 70,000 units (-1.3%) in July, to a SAAR of 5.440 million units (5.570
million expected).
Inventory of existing homes shrank in absolute terms (-20,000 units) but was
unchanged in months-of-inventory terms. With new-home sales decreasing at about
the same rate as existing-home sales, the share of total sales comprised of new
homes dropped to 9.5%. The median price of previously owned homes sold in July decreased
by $5,000 (-1.9% MoM) from June’s all-time high of $263,300.
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Housing
affordability deteriorated for an eighth month as the median price of
existing homes for sale in June jumped by $11,900 (+4.7%; +6.6 YoY), to $266,200.
Concurrently, Standard &
Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic
Home Price indices posted a not-seasonally adjusted monthly change of +0.9% (+5.8%
YoY) -- marking a new all-time high for the index.
“The
trend of increasing home prices is continuing,” said David
Blitzer, Managing Director and Chairman of the Index Committee at S&P
Dow Jones Indices. “Price increases are supported by a tight housing market.
Both the number of homes for sale and the number of days a house is on the
market have declined for four to five years. Currently the months-supply of
existing homes for sale is low, at 4.2 months. In addition, housing starts remain
below their pre-financial crisis peak as new home sales have not recovered as
fast as existing home sales.”
“Rising
prices are the principal factor driving affordability down. However, other
drivers of affordability are more favorable: the national unemployment rate is
down, and the number of jobs created continues to grow at a robust pace, rising
to close to 200,000 per month. Wages and salaries are increasing, maintaining a
growth rate a bit ahead of inflation. Mortgage rates, up slightly since the end
of 2016, are under 4%. Given current economic conditions and the tight housing
market, an immediate reversal in home price trends appears unlikely.”
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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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