The Leaking Tire of Existing Home Sales Continues and Slows the Speed of the Market (Though Still Highly Drivable) — Down 2.09 Percent Vs a Year Ago — Median Price Up 4.2 Percent

Existing home sales dropped for the fourth month in a row, down percent 4.1 percent in September 2018 versus a year ago to 5.15 million on a seasonally adjusted annualized basis (SAAR) according to National Association of Realtors® (NAR).  Sales were down from August 3.4 percent (SAAR).  On an unadjusted basis, housing sales in the first nine months of 2018 totaled 4.113 million, down 2.09 percent from a year ago (see the table below).  Sales for the month of September 2018 came in at 420,000 versus 462,000, a large 9.1 percent year-over-year decline.

The tire leak gains momentum.  Still drivable, though.  Just not as fast.

September 2018 median price was $258,100, up 4.2 percent from a year ago, with the average price of $296,800 up 2.5 percent year-over-year.  The median and average prices set all-time records in June 2018.  Median home price declines in July, August and September were all due to normal seasonality changes.  Median price has now risen 79 consecutive months on a year-over-year basis.

The following graph shows the trend in housing sales based on a trailing 12-month basis (TTM), but with monthly median prices.  Sales are definitively easing down, despite a strong U.S. economy.

Sales and median prices are shown on a monthly basis in the following two graphs.  Sales have been up in just four of the past nine months in 2018 on a year-over-year basis.  Median price, on the other hand, continued on an upward accent driven by minimal inventory of just 4.2 months (seasonally adjusted) with 6.0 months considered normal.  Inventory was not much changed from 4.0 months year ago.  The inventory of available listings tallied 1.88 million versus 1.86 million a year ago.

The trend and corresponding seasonality in average prices are shown in the next graph.

Other metrics and insights from the September 2018 NAR release included:

  • 47 percent of the sales closed in September were on the market less than one month, with the typical property lasting just 32 days from the day of listing to  having a signed purchase contract
  • First-time homebuyers were present in three-out-of-every 10 transactions (32 percent) – up slightly from 29 percent a year ago
  • Investors acquired 13 percent of all sales in September 2018, the same as August but down from 15 percent a year ago
  • All-cash sales made up one-in-five closings (21 percent) in September
  • Distressed sales made up 3 percent of September’s closings down from 4 percent a year ago.  Foreclosures made up 2 percent and short sales 1 percent
  • Million dollar and up homes made up 3.3 percent of all sales in September 2018 (down from 3.5 percent the prior month), buy only the fifth time on a monthly basis above the 2 percent range

To read the entire NAR release click https://www.nar.realtor/newsroom/existing-home-sales-decline-across-the-country-in-september

The slowly leaking tire analogy continues.  The housing-sales tire is still drivable at moderate speeds, but the warning light is on and increasing in intensity.  For now, however, housing demand remains fundamentally strong given the U.S. economy with demand  still out-pacing supply resulting in ongoing home price increases albeit shrinking home sales.

Ted

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