July 2020 Residential Sales, Inventory and Prices

Click image for larger view

Click image for larger view

Sales of new single-family houses in July 2020 were at a seasonally adjusted annual rate (SAAR) of 901,000 units (700,000 expected). This is 13.9% (±20.0%)* above the revised June rate of 791,000 and is 36.3% (±27.4%) above the July 2019 SAAR of 661,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +41.8%. For longer-term perspectives, NSA sales were 35.1% below the “housing bubble” peak but 49.2% above the long-term, pre-2000 average.

The median sales price of new houses sold in July fell ($6,400 or -1.9% MoM) to $330,600; meanwhile, the average sales price increased to $391,300 ($9,400 or +2.5%). Starter homes (defined here as those priced below $200,000) comprised 9.0% of the total sold, down from the year-earlier 10.9%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 1.3% of those sold in July, 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.

Click image for larger view

As mentioned in our post about housing permits, starts and completions in July, single-unit completions decreased by 17,000 units (-1.8%). Since completions fell while sales rose (110,000 units; +13.9%), inventory for sale contracted in both absolute (-5,000 units) and months-of-inventory (-0.6 month) terms.

Click image for larger view

Existing home sales soared by a record amount in July (1.160 million units or +24.7%), to a SAAR of 5.86 million units (5.400 million expected). Inventory of existing homes for sale contracted in both absolute (-40,000 units) and months-of-inventory terms (-0.8 month). Because resales rose by a wider margin than new-home sales, the share of total sales comprised of new homes slipped to 13.3%. The median price of previously owned homes sold in July rose to a record $304,100 ($9,600 or +3.3 MoM).

Click image for larger view

Housing affordability deteriorated (-6.5 percentage points) even as the median price of existing homes for sale in June rose by $12,000 (+4.2% MoM; +3.5 YoY), to $298,600. 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% (+4.3% YoY).

“Housing prices were stable in June,” said Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “The National Composite Index rose by 4.3% in June 2020, as it had also done in May (June’s growth was slightly lower in the 10- and 20-City Composites, which were up 2.8% and 3.5%, respectively). More data will be required to understand whether the market resumes its previous path of accelerating prices, continues to decelerate, or remains stable. That said, it’s important to bear in mind that deceleration is quite different from an environment in which prices actually fall.

“June’s gains were quite broad-based. Prices increased in all 19 cities for which we have data, accelerating in five of them. Phoenix retains the top spot for the 13th consecutive month, with a gain of 9.0% for June. Home prices in Seattle rose by 6.5%, followed by Tampa at 5.9% and Charlotte at 5.7%. As has been the case for the last several months, prices were particularly strong in the Southeast and West, and comparatively weak in the Midwest and (especially) Northeast.

Click image for larger view

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.