June 2019 Residential Sales, Inventory and Prices

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Sales of new single-family houses in June 2019 were at a seasonally adjusted annual rate (SAAR) of 646,000 units (655,000 expected). This is 7.0% (±15.2%)* above the revised May rate of 604,000 (originally 626,000) and 4.5% (±21.8%)* above the June 2018 SAAR of 618,000 units; the not-seasonally adjusted year-over-year comparison (shown in the table above) was +1.8%. For longer-term perspectives, not-seasonally adjusted sales were 53.5% below the “housing bubble” peak but 9.0% above the long-term, pre-2000 average.

The median sales price of new houses sold in June 2019 rose to $310,400 ($6,900 or +2.3% MoM); meanwhile, the average sales price retreated to $368,600 ($2,600 or -0.7%). Starter homes (defined here as those priced below $200,000) comprised 10.5% of the total sold, down from the year-earlier 12.5%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up less than 1% of those sold in June, down from 1.8% a year earlier.

* 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 June, single-unit completions fell by 16,000 units (-1.8%). Although sales rose (+42,000 units; 7.0%) while completions fell, inventory for sale expanded in absolute terms (+2,000 units) but contracted in months-of-inventory (-0.4 month) terms. 

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Existing home sales retreated in June (-90,000 units), to a SAAR of 5.27 million units (5.34 million expected). Inventory of existing homes for sale expanded in both absolute (+20,000 units) and months-of-inventory terms (+0.1 month). The median price of previously owned homes sold in June jumped to a new record $285,700 (+$7,500 or 2.7% MoM). Because new-home sales rose while resales fell, the share of total sales comprised of new homes bumped up to 10.9%. 

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Housing affordability declined (-2.1 percentage points) as the median price of existing homes for sale in May rose by $11,100 (+4.1%; +4.6 YoY), to $280,200. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change of +0.8% (+3.4% YoY) -- the slowest rate of annual appreciation since September 2012.

“Nationally, year-over-year home price gains were lower in May than in April, but not dramatically so and a broad-based moderation continued,” said Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “Among 20 major U.S. city home price indices, the average YoY gain has been declining for the past year or so and now stands at the moderate nominal YoY rate of 3.1%.

“Though home price gains seem generally sustainable for the time being, there are significant variations between YoY rates of change in individual cities. Seattle’s home price index is now 1.2% lower than it was in May 2018, the first negative YoY change recorded in a major city in a number of years. On the other hand, Las Vegas and Phoenix, while cooler than they were during 2018, remain quite strong at 6.4% and 5.7% YoY gains, respectively. Whether negative YoY rates of change spread to other cities remains to be seen; for now, there is still substantial diversity in local trends. Nationally, increasing housing supply points to somewhat weakened demand, but the fact that seven cities experienced stronger YoY price gains in May than they did in April suggests an underlying resiliency that may mitigate the risk of overshooting to the downside at the national level." 

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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.