July 2019 Residential Sales, Inventory and Prices

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Sales of new single-family houses in July 2019 were at a seasonally adjusted annual rate (SAAR) of 635,000 units (645,000 expected). This is 12.8 percent (±16.2 percent)* below the revised June rate of 728,000 (originally 646,000), but 4.3 percent (±14.0 percent)* above the July 2018 SAAR of 609,000 units; the not-seasonally adjusted year-over-year comparison (shown in the table above) was +1.9%. For longer-term perspectives, not-seasonally adjusted sales were 54.3% below the “housing bubble” peak but 1.4% above the long-term, pre-2000 average.

The median sales price of new houses sold in July rose to $312,800 ($6,800 or +2.2% MoM); meanwhile, the average sales price jumped to $388,000 ($33,500 or +9.4%). Starter homes (defined here as those priced below $200,000) comprised 11.3% of the total sold, down from the year-earlier 11.5%; 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 July, down from 3.8% 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 July, single-unit completions increased by 38,000 units (+4.3%). Because sales fell (-93,000 units; -12.8%) while completions rose, inventory for sale expanded in both absolute (+4,000 units) and months-of-inventory (+0.9 month) terms. 

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Existing home sales advanced in July (+130,000 units), to a SAAR of 5.42 million units (5.385 million expected). Inventory of existing homes for sale contracted in both absolute (-30,000 units) and months-of-inventory (-0.2 month) terms. The median price of previously owned homes sold in July declined to $280,800 (-$4,500 or 1.6% MoM). Because new-home sales fell while resales rose, the share of total sales comprised of new homes tumbled to 10.5%. 

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Housing affordability edged up (+1.9 percentage points) even as the median price of existing homes for sale in June rose by $8,000 (+2.8%; +4.5 YoY), to $288,900. 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 +0.6% (+3.1% YoY) -- the slowest rate of annual appreciation since September 2012.

“Home price gains continue to trend down, but may be leveling off to a sustainable level,” says Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “The average YoY gain declined to 3.0% in June, down from 3.1% the prior month. However, fewer cities (12) experienced lower YoY price gains than in May (13).

“The southwest (Phoenix and Las Vegas) remains the regional leader in home price gains, followed by the southeast (Tampa and Charlotte). With three of the bottom five cities (Seattle, San Francisco, and San Diego), much of the west coast is challenged to sustain YoY gains. For the second month in a row, however, only Seattle experienced outright decline with YoY price change of -1.3%. The U.S. National Home Price NSA Index YOY price change in June 2019 of 3.1% is exactly half of what it was in June 2018. While housing has clearly cooled off from 2018, home price gains in most cities remain positive in low single digits. Therefore, it is likely that current rates of change will generally be sustained barring an economic downturn.” 

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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.