August 2023 Residential Sales, Inventory and Prices

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Sales of new single-family houses in August 2023 were at a seasonally adjusted annual rate (SAAR) of 675,000 units (699,000 expected). This is 8.7% (±15.6%)* below the revised July rate of 739,000 (originally 714,000 units), but 5.8% (±21.1%)* above the August 2022 SAAR of 638,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +5.9%. For longer-term perspectives, NSA sales were 51.4% below the “housing bubble” peak but 3.3% above the long-term, pre-2000 average.

The median sales price of new houses sold in August 2023 was $430,300 (-1.4%, or $6,300). The average sales price was $514,000 (+1.2%, or $6,100). Homes priced at/above $750,000 comprised 14.8% of sales, down from the year-earlier 15.7%.

* 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 retreated by 68,000 units (-6.6%). Sales also fell (64,000 units, or -8.7%), resulting in inventory for sale expanding in both absolute (+5,000 units) and months-of-inventory (+0.8 month) terms. 

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Existing home sales slipped (-0.7% or 30,000 units) in August to a SAAR of 4.04 million units (4.10 million expected). The inventory of existing homes for sale contracted in absolute terms (-10,000 units) but was unchanged in months-of-inventory terms. Because resales retreated more slowly than new-home sales, the share of total sales comprised of new homes decreased to 14.3%. The median price of previously owned homes sold in August rose to $407,100 (+0.3% or $1,400).

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Housing affordability was unchanged as the median price of existing homes for sale in July fell by $3,400 (-0.8% MoM; +1.6% YoY) to $412,300. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices decelerated to a not-seasonally adjusted monthly change of +0.6% (+1.0% YoY).

“U.S. home prices continued to rally in July 2023,” said Craig Lazzara, Managing Director at S&P DJI. “Our National Composite rose by 0.6% in July, and now stands 1.0% above its year-ago level. Our 10- and 20-City Composites each also rose in July 2023, and likewise stand slightly above their July 2022 levels.

“We have previously noted that home prices peaked in June 2022 and fell through January of 2023, declining by 5.0% in those seven months. The increase in prices that began in January has now erased the earlier decline, so that July represents a new all-time high for the National Composite. Moreover, this recovery in home prices is broadly based. As was the case last month, 10 of the 20 cities in our sample have reached all-time high levels. In July, prices rose in all 20 cities after seasonal adjustment (and in 19 of them before adjustment).

“That said, regional differences continue to be striking. On a year-over-year basis, the Revenge of the Rust Belt continues. The three best-performing metropolitan areas in July were Chicago (+4.4%), Cleveland (+4.0%), and New York (+3.8%), repeating the ranking we saw in May and June. The bottom of the leader board reshuffled somewhat, with Las Vegas (-7.2%) and Phoenix (-6.6%) this month’s worst performers.

“All of the cities at all-time highs are in the Eastern or Central time zones, and with two exceptions (Dallas and Tampa), all of the cities not at all-time highs are in the Pacific or Mountain time zones. The Midwest (+3.2%) continues as the nation’s strongest region, followed by the Northeast (+2.3%). The West (-3.8%) and Southwest (-3.6%) remain the weakest regions.

“On a year-to-date basis, the National Composite has risen 5.3%, which is well above the median full calendar year increase in more than 35 years of data. Although the market’s gains could be truncated by increases in mortgage rates or by general economic weakness, the breadth and strength of this month’s report are consistent with an optimistic view of future results.”

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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.