Affordability Erosion Grows Continues to Impact Existing Home Sales — Down 2.2 Percent Year-Over-Year, Price Up 4.3 Percent

Existing home sales dropped 2.2 percent in June 2019 compared to a year ago coming in at 5.27 million on a seasonally adjusted annualized rate (SAAR) as reported by the National Association of Realtors® (NAR).  Sales were down 1.7 percent sequentially from May.   Total sales in June (raw, not seasonally adjusted) came in at 527,000, down 7.5 percent compared to June 2018.    The table below shows sales year-to-date 2019 compared to the same period in 2018.

The following graph shows monthly sales comparing 2017, 2018 and 2019.  Note the seasonality in sales with the trough occurring in January and February annually with the peak in June.  May was the only month this year that posted sales greater than a year ago.

The next graph shows existing home sales from two perspectives.   The black line is the number of sales on a SAAR, while the green shaded area show total sales (raw, unadjusted) for the trailing twelve months (TTM).

The median sales price in June 2019 was $285,700 (an all-time record), up 4.3 percent versus a year ago, making the 88th consecutive month posting a year-over-year increase.  The graph shows sales on a TTM basis since 2014 and the median monthly sales price.  Sales were down 4.0 percent as of June on TTM basis while price was up 4.0 percent based on the 12-month moving average.

 

Other metrics and insights from the June 2019 NAR release included:

  • 56 percent of the sales closed in June were on the market less than one month, with the typical property lasting 27 days from the time of listing to a signed purchase contract, essentially flat from 26 days a year ago
  • First-time homebuyers purchased one-third of the sales in June (35 percent) up from 31 percent level a year ago
  • Sales of $1 million and up properties accounted for 3.5 percent of all June closings versus 3.8 percent one year ago
  • All-cash sales made up 16 percent of all sales in June, down from 22 percent a year ago
  • Investors acquired 10 percent of all home sales in June versus 13 percent a year ago
  • Distressed sales made up just 2 percent of the transactions in June, down from 3 percent a year ago
  • The number of homes available for sale rose ever-so-slightly to 1.93 million from 1.91 million a year ago

To read the June 2019 Existing Home Sales Press release from NAR click https://www.nar.realtor/newsroom/existing-home-sales-falter-1-7-in-june

Affordability remains a major hurdle for many prospective buyers.  In the past 10-years the average hourly wage rose by 26.9 percent while median price rocketed up 57.2 percent

My expectation now calls for sales to be down at least 2 percent in 2019 compared to a year ago, with median prices rising 3.2 to 3.6 percent.

Ted

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