September 2019 Residential Sales, Inventory and Prices

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Sales of new single-family houses in September 2019 were at a seasonally adjusted annual rate (SAAR) of 701,000 units (699,000 expected). This is 0.7% (±16.1%)* below the revised August rate of 706,000 (originally 713,000), but 15.5% (±20.2%)* above the September 2018 SAAR of 607,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +17.4%. For longer-term perspectives, NSA sales were 49.5% below the “housing bubble” peak but 3.3% above the long-term, pre-2000 average.

The median sales price of new houses sold in September plummeted to $299,400 (-$25,800 or 7.9% MoM); meanwhile, the average sales price also dropped to $362,700 (-$32,100 or -8.1%). Starter homes (defined here as those priced below $200,000) comprised 14.8% of the total sold, down substantially from the year-earlier 8.7%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 3.7% of those sold in September, up from 2.2% 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 September, single-unit completions decreased by 80,000 units (-8.6%). Because the tick down in sales (-5,000 units; 0.7%) was smaller than that of completions, inventory for sale shrank in absolute terms (-2,000 units) but was stable in months-of-inventory terms. 

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Existing home sales retreated in September (-120,000 units or 2.2%), to a SAAR of 5.38 million units (5.45 million expected). Inventory of existing homes for sale was unchanged in absolute terms but expanded slightly (+0.1 month) in months-of-inventory terms. Because new-home sales fell by a proportionally smaller amount, the share of total sales comprised of new homes bumped up to 11.5%. The median price of previously owned homes sold in September declined to $272,100 (-$6,800 or 2.4% MoM). 

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Housing affordability improved (+5.1 percentage points) as the median price of existing homes for sale in August retreated by $2,900 (-1.0%; +4.7 YoY), to $280,700. 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 +0.2% (+3.2% YoY) -- the slowest pre-2019 rate of annual appreciation since September 2012.

“The U.S. National Home Price NSA Index trend remained intact with a year-over-year price change of 3.2%” said Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices. “However, a shift in regional leadership may be underway beneath the headline national index.

“Phoenix saw an increase in its YOY price change to 6.3% and retained its leading position. However, Las Vegas dropped from number two to number eight among the cities of the 20-City Composite, falling from a 4.7% YOY change in July to only 3.3% in August. Meanwhile, the Southeast region included three of the top four cities. Charlotte, Tampa, and Atlanta all recorded solid YOY performance with price changes of 4.5%, 4.3%, and 4.0%, respectively. In the Northwest, Seattle’s YOY change turned positive (0.7%) after three consecutive months of negative YOY price changes. The 10-City Composite YOY price change declined slightly from July to 1.5%, while the 20-City Composite YOY price change remained steady at 2.0%. San Francisco was the only city to record a negative YOY price change (-0.1%).” 

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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.