Existing home sales decline again in August but beat expectations for the first time in months.

Existing Home Sales data via St. Louis Fed, chart by Mish 
 

The National Association of Realtors^® (NAR) reports Existing-Home Sales Slipped 0.4 Percent in August

Key Existing-Home Sales Points

• Existing-home sales decreased for the seventh straight month to a seasonally adjusted annual rate of 4.80 million. 
• Sales tailed off 0.4% from July and 19.9% from the previous year.
• The median existing-home sales price rose 7.7% from one year ago to $389,500.
• After five successive monthly increases, the inventory of unsold existing homes dwindled to 1.28 million by the end of August or the equivalent of 3.2 months at the current monthly sales pace.
• The inventory of unsold existing homes rose to 1.31 million by the end of July or the equivalent of 3.3 months at the current monthly sales pace.
• Total housing inventory registered at the end of August was 1,280,000 units, a decrease of 1.5% from July and unchanged from the previous year. Unsold inventory sits at a 3.2-month supply at the current sales pace – identical to July and up from 2.6 months in August 2021.
• The median existing-home price for all housing types in August was $389,500, a 7.7% jump from August 2021 ($361,500), as prices ascended in all regions. This marks 126 consecutive months of year-over-year increases, the longest-running streak on record. However, it was the second month in a row that the median sales price retracted after reaching a record high of $413,800 in June, the usual seasonal trend of prices declining after peaking in the early summer.
• Properties typically remained on the market for 16 days in August, up from 14 days in July and down from 17 days in August 2021. Eighty-one percent of homes sold in August 2022 were on the market for less than a month.
• First-time buyers were responsible for 29% of sales in August, consistent with July 2022 and August 2021. NAR's 2021 Profile of Home Buyers and Sellers – released in late 20214 – reported that the annual share of first-time buyers was 34%.
• All-cash sales accounted for 24% of transactions in August, the same share as in July, but up from 22% in August 2021.
• Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in August, up from 14% in July and 15% in August 2021.

Existing Home Sales vs New Home Sales

• Existing home sales are recorded at closing they represent contracts made one to two months ago.  
• New home sales are recorded at contract signing. They are a leading indicator of housing starts. 

30-Year Fixed Mortgage Rates 

Mortgage Rate Courtesy of Mortgage News Daily
 

Crash Will Resume

One possible explanation for the relative strength in August (contracts signed in July) is the dip in mortgage rates from over 6% in June to 5% in July.

But rates are now at a new high for the move, 6.47%, and climbing. 

Sales are down 26% in seven months. That's a crash and unprecedented outside of recessions. I believe we are in one now, starting May.  

Crash in sales not price.

The longer prices stay high, the longer and higher the Fed hikes.

— Mike "Mish" Shedlock (@MishGEA) September 21, 2022

Sure - I updated my lead chart to explain.

Sales are down 26% in seven months. That's a crash and unprecedented outside of recessions. I believe we are in one now, starting May. pic.twitter.com/OFhKzrFZfP

— Mike "Mish" Shedlock (@MishGEA) September 21, 2022

The crash will resume.

GDPNow Forecast for 2022 Q3 Barely Positive Following Housing Starts Report

The seemingly strong new residential construction report for August had a negative impact on the Atlanta Fed GDP forecast for the third quarter of 2022.

For discussion, please see GDPNow Forecast for 2022 Q3 Barely Positive Following Housing Starts Report.

NAHB National Housing Market Index Declines for the 9th Consecutive Month

On September 19, I noted NAHB National Housing Market Index Declines for the 9th Consecutive Month

The housing crash is certainly not over. And the trend toward weaker and weaker data overall is still intact.

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