August 2020 Residential Sales, Inventory and Prices

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Sales of new single-family houses in August 2020 were at a seasonally adjusted annual rate (SAAR) of 1,011,000 units (774,000 expected). This is 4.8 percent (±10.5 percent)* above the revised July rate of 965,000 (originally 901,000 units) and 43.2 percent (±19.5 percent) above the August 2019 SAAR of 706,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +45.6%. For longer-term perspectives, NSA sales were 27.2% below the “housing bubble” peak but 58.8% above the long-term, pre-2000 average.

The median sales price of new houses sold in August fell ($15,000 or -4.6% MoM) to $312,800; meanwhile, the average sales price decreased to $369,000 ($2,900 or -0.8%). Starter homes (defined here as those priced below $200,000) comprised 7.8% of the total sold, down from the year-earlier 8.8%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 0.6% of those sold in August, 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 August, single-unit completions decreased by 42,000 units (-4.4%). Since completions fell while sales rose (46,000 units; +4.8%), inventory for sale contracted in both absolute (-9,000 units) and months-of-inventory (-0.3 month) terms.

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Existing home sales extended gains in August (140,000 units or +2.4%), to a SAAR of 6.00 million units (5.965 million expected). Inventory of existing homes for sale contracted in both absolute (-10,000 units) and months-of-inventory terms (-0.1 month). Although resales rose by a wider margin than new-home sales, the share of total sales comprised of new homes ticked up to 14.4%. The median price of previously owned homes sold in August rose to a new record $310,600 ($5,100 or +1.7 MoM).

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Housing affordability deteriorated (-0.9 percentage point) as the median price of existing homes for sale in July rose by $9,900 (+3.3% MoM; +8.5 YoY), to $307,800. 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% (+4.8% YoY).

“Housing prices rose in July,” said Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “The National Composite Index gained 4.8% relative to its level a year ago, slightly ahead of June’s 4.3% increase. The 10- and 20-City Composites (up 3.3% and 3.9%, respectively) also rose at an accelerating pace in July compared to June. The strength of the housing market was consistent nationally -- all 19 cities for which we have July data rose, with 16 of them outpacing their June gains.

“In previous months, we’ve noted that a trend of accelerating increases in the National Composite Index began in August 2019. That trend was interrupted in May and June, as price gains decelerated modestly, but now may have resumed. Obviously more data will be required before we can say with confidence that any COVID-related deceleration is behind us.

“Phoenix’s 9.2% increase topped the league table for July; this is the 14th consecutive month in which Phoenix home prices rose more than those of any other city. Seattle (7.0%), Charlotte (6.0%) and Tampa (5.9%) continue to occupy the next three places, but there was some growth even in the worst performing cities, Chicago (0.8%) and New York (1.3%). Prices were particularly strong in the Southeast and West regions, and comparatively weak in the Midwest and Northeast.”

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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.