NAR reports existing home sales fall in August

On September 21st 2015, NAR Chief Economist Lawrence Yun discussed the rate of existing-home sales and the national median existing-home price in Aug 2015.

The full video and transcript are shown below. Here are the highlights:

  • Month to month existing home sales fell 4.8%. Still comfortably higher.
  • Year over year inventory full 1.7%. No meaningful change. 
  • Medium home price is $288,700 up 4.7% from a year ago. Softest price appreciation in twelve months. 
  • Yun welcomes moderation in prices from upcoming monetary policies.
  • Builders surprisingly still not in the game. Labor still an issue.
  • Stress analysis suggests mortgage rates have to go to 6% to have a meaningful pullback to housing growth.

 

From Lawrence Yun: “Existing home sales in August decreased 4.8% from the prior month to a seasonally adjusted annualized rate of 5.31 million units. From one year ago, august of last year to august of this year, sales were still comfortably higher. It is up 6.2% over the past twelve months. There are 2.29 million homes available for sale at the end of august which is up 1.3% from one month ago, but from twelve months ago – one year ago, it is down 1.7%.

The way I view this inventory figure of little up from month ago, little down from one year ago is essentially no change, so in other words, we have had tight inventory situation and we continue to experience high inventory situation. No meaningful improvement in additional inventory in the market place, generally speaking. At the current sales pace it would take 5.2 months to exhaust the inventory. The national median existing home price in august was $228,700, which is an increase of 4.7% from one year ago and a 4.7% price appreciation would be the softest price appreciation in twelve months, so prices are still rising but at a softer pace.

How do I make up the figures and how do I put it in the context with the monetary policy of potential changes in the upcoming months. First we welcome the moderation in prices. We believe the price increase rising too fast hurts affordability, hurts overall housing market. It’s good for home owners, but it will reduce the transaction in the market.

The builders surprisingly still not in the game, only barely increasing, only the multi-family market appears to be doing well. The single family market still I would consider as being in recessionary condition. Several combination factors is [sic] that difficulty of obtaining construction loans, difficulty of finding skilled construction workers, local government officials approving only apartment buildings but not condominium buildings, so there are many things that’s [sic] holding back the ownership occupy housing while rental housing is actually above normal in terms of construction activity right now.

Federal reserve policy, so as we know they did not make any changes. They will do what they need to do and we will respect that. We are not too concerned because we think that policy changes will have not too big an impact on mortgage rates but nonetheless over the next couple of years it’s clearly in a tightening mode from the Central Bank and therefore mortgage rates will be rising, and how fast, how quickly it remains to be seen. The latest data is implying about roughly 4% mortgage rate and in our stress test analysis mortgage rate has to go up 6% to have a meaningful pullback to the housing, so we are not too concerned.”

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