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| Existing Home Sales Jump in July |
| Written by Jonathan Smoke | |
| 08.25.2008 | |
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Discuss this article on the forums. (0 posts) The National Association of Realtors reported preliminary July sales today. Almost reversing the 3.4% decline in June, existing home sales increased 3.1% to a seasonally adjusted rate of 5 million in July. What is the national media focusing on? Intentionally misleading readings of inventory levels. From WSJ.com: “Existing-home sales climbed in July to the highest level in five months, but sky-high inventory hit a record, signaling more price declines…. Despite the sales increase, inventories of homes climbed by 3.9% at the end of July to a record-high 4.67 million available for sale.”
From NYTimes.com: “Home sales perked up in July, a respite for the housing slump, as falling prices appeared to lure more buyers into the market…. But the number of homes for sale increased significantly as well, which could push prices down even further.”
From CNBC.com: “Sales of existing homes rose 3.1 percent in July as buyers snapped up deeply discounted properties in parts of the country hit hardest by the housing bust, a real estate trade group said…. The inventory of homes for sale rose to a record 4.67 million homes or a 11.2 months' supply at the current sales pace, matching a record set in April.”
The details of the report revealed what really happened. Total existing home sales were up 3.1% over June. Underneath that composite, sales of single family homes were up 3.1% while condos were up 3.4%. On the inventory side, while the total inventory of homes for sale did climb 3.9%, the inventory of single family homes for sale did not increase at all. The inventory of condos for sale jumped 29% to a 15.1 months supply. The months’ supply of single family homes, which represents 84% of all inventory, fell to 10.6 months. These new numbers show that we are not out of the woods yet, but we can definitely see that the situation is not deteriorating. We need to see a jump month-over-month of twice what we saw this month to see the kind of signal we have seen at the end of prior housing downturns. As it stands, the July reading wiped out the more negative reading in June. It was also interesting to note that there was huge variation in the results by region. The West showed a 9.7% increase in existing home sales while the South experienced a 0.5% decline. The regional variation is probably influenced by the disparity in price changes over the last 24 months as well as the levels of foreclosed homes being sold by banks. Regardless of the cause, it is good to see a rate of sales at 5 million again. It will be interesting to see what’s reported in tomorrow’s reading on July’s new home sales. 
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