Existing Home Sales Ratcheted Up 1.1 Percent Vs a Year Ago in February 2018, Reversing a Miss in January — Despite Shrinking Inventory

Sales of existing homes ratcheted up 1.1 percent in February 2018 compared to a year ago, hitting a seasonally adjusted annualized sales rate (SAAR) of 5.54 million homes according to the National Association of Realtors® (NAR).  On a raw unadjusted basis, home sales of 319,000 in February 2018 were up from 315,000 a year ago, a gain of 1.3 percent.

Median price rose from  $228,200 a year ago to $241,700 in February 2018, a gain of 5.9 percent.  Median home prices have now increased 72 consecutive months on a year-over-year basis.

There were 1.59 million homes available for sale as of the end of February, a decline of 8.1 percent versus a year ago.  Inventory has now declined on a year-over-year basis for 33 consecutive months.   At the current sales pace, given current inventory, there is an estimated miniscule 3.4 month supply, with six months considered normal.

The following graph shows the monthly median price and the total number of home sales in the prior 12 months commencing January 2014.  Realize that the U.S. is selling more homes (plus or minus) now since June 2006.

The next graph shows the monthly raw data (not seasonally adjusted) for each month commencing January 2016.  Following that are median prices for the same time period.  Given that current supply of homes is approximately one-half of normal, home values continue to rise at a rapid pace when compared to income growth and inflation.  It’s all about demand versus supply.

The final graph shows average home prices (not seasonally adjusted), which peaked at an all-time record $303,500 in June of 2017.

Other metrics and insights from the NAR release included:

  • All-cash transactions made up 24 percent of all February 2018 existing home sales, up from 22 percent in January, but down from 27 percent a year ago
  • Distressed sales made up just 4 percent of all February 2018 sales volume vs 7 percent a year ago.  Foreclosures were 3 percent and short sales 1 percent
  • Investors acquired 15 percent of all home sales in February 2018, down from 17 percent in January but unchanged from a year ago

To read the entire press release from NAR click https://www.nar.realtor/newsroom/existing-home-sales-rebound-30-percent-in-february

Overall potential housing sales volume, despite rising rates and limited inventory, points to no-place-but-up for home prices.  Add in the increased GDP (from tax cuts and infrastructure spending) and housing has an incredible outlook in 2018 – foregoing any major economic events.

Things are looking great!

Ted

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