Existing home sales gained some daylight in October 2018 versus the prior month, increasing 1.4 percent to 5.22 million on a seasonally adjusted annualized basis (SAAR) according to National Association of Realtors® (NAR). October sales, however, were off 5.1 percent on a year-over-year comparison. On an unadjusted basis, housing sales in the first 10 months of 2018 totaled 4.56 million, down 2.1 percent from a year ago (see the table below). Sales for the month of October 2018 came in at 446,000 compared to 458,000 a year ago for a 2.6 percent year-over-year decline.
The median price for October 2018 was $255,400, up 3.8 percent from a year ago, with the average price of $294,200 up 2.3 percent year-over-year. The median and average prices set all-time records in June 2018. Median home price declines in July, August, September and October were all due to normal seasonality changes. Median price has now risen 80 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 continue easing down, despite a strong U.S. economy.
The next graph shows both the seasonally adjusted annualized sales rate for existing home sales and the actual trailing 12-months sales rate. Each of these metrics have advantages and disadvantages. The long-run trends do reflect a softening housing sales market.
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 ten 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 increased from 3.8 months year ago. The inventory of available listings tallied 1.85 million versus 1.80 million a year ago.
The trend and corresponding seasonality in average prices are shown in the next graph.
Other metrics and insights from the October 2018 NAR release included:
- 46 percent of the sales closed in October were on the market less than one month, with the typical property lasting just 33 days from the time of listing to having a signed purchase contract compared to 34 days a year ago and 32 days the prior month
- First-time homebuyers were present in three-out-of-every 10 transactions (31 percent) compared to 32 percent both the month prior and a year ago
- All-cash sales made up one-in-four closings (23 percent) in October
- Investors acquired 15 percent of all home sales in October
- Distressed sales made up 3 percent of October’s closings down from 4 percent a year ago – the lowest level since NAR commenced data collection in the metric in October 2008. Foreclosures made up 2 percent and short sales 1 percent
- Million dollar and up homes made up 3.2 percent of all sales in October 2018 (down from 3.3 percent the prior month), only the sixth time ever in the 3 percent range on monthly basis
To read the entire NAR release click https://www.nar.realtor/newsroom/existing-home-sales-increase-for-the-first-time-in-six-months
Despite a gain in sales from the prior month on a seasonally adjusted basis, actual sales (not seasonally adjusted) continued a slight descent. No doubt rising prices and interest rates are impacting affordability is taking a toll. Do remember this: The first sign of a peaked-out-housing market is a decline in sales, not a decline in price. The key is to stay focused on sales volumes.
In recent months I have likened the housing market to a slowly leaking tire – and this analogy remains. It is still drivable, but take a good look prior to getting on the road for a long journey.