August 2019 Residential Sales, Inventory and Prices

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Sales of new single-family houses in August 2019 were at a seasonally adjusted annual rate (SAAR) of 713,000 units (645,000 expected). This is 7.1% (±20.3%)* above the revised July rate of 666,000 (originally 635,000) and 18.0% (±19.9%)* above the August 2018 SAAR of 604,000 units; the not-seasonally adjusted year-over-year comparison (shown in the table above) was +21.3%. For longer-term perspectives, not-seasonally adjusted sales were 48.7% below the “housing bubble” peak but 9.0% above the long-term, pre-2000 average.

The median sales price of new houses sold in August rose to $328,400 (+$23,000 or 7.5% MoM); meanwhile, the average sales price jumped to a new record $404,200 (+$31,500 or +8.5%). Starter homes (defined here as those priced below $200,000) comprised 10.5% of the total sold, down fractionally from the year-earlier 10.6%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 1.8% of those sold in August, down from 2.1% 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 August, single-unit completions increased by 34,000 units (+3.7%). Because the rise in sales (+47,000 units; 7.1%) outpaced that of completions, inventory for sale shrank in both absolute (-4,000 units) and months-of-inventory (-0.4 month) terms. 

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Existing home sales advanced in August (+70,000 units), to a SAAR of 5.49 million units (5.375 million expected). Inventory of existing homes for sale contracted in both absolute (-40,000 units) and months-of-inventory (-0.1 month) terms. The median price of previously owned homes sold in August declined to $278,200 (-$2,200 or 0.8% MoM). Because new-home sales rose by a proportionally greater amount, the share of total sales comprised of new homes bumped up to 11.5%. 

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Housing affordability improved (+7.3 percentage points) as the median price of existing homes for sale in July retreated by $4,500 (-1.6%; +4.5 YoY), to $284,000. 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 +0.4% (+3.2% YoY) -- the slowest rate of annual appreciation since September 2012.

“Year-over-year home prices continued to gain, but at ever more modest rates,” said Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “Charlotte surpassed Tampa to join the top three cities, and Seattle may be turning around from its recent negative streak of YOY price changes, improving from -1.3% in June to -0.06% in July.

“Overall, leadership remains in the southwest (Phoenix and Las Vegas) and southeast (Charlotte and Tampa). Other pockets of relative strength include Minneapolis, which increased its YOY gain to 4.2%, and Detroit, which is closely behind at 4.1% YOY. The 10-City and 20-City Composites both experienced lower YOY price gains than last month, declining to 1.6% and 2.0% respectively. However, the U.S. National Home Price NSA Index remained steady with a YOY price gain of 3.2%, the same as prior month. Home price gains remained positive in low single digits in most cities, and other fundamentals indicate renewed housing demand. According to the National Association of Realtors, the YOY change in existing home sales was positive in July for the first time in a number of months, and housing supply tightened since peaking in June.” 

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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.