No matter how you look at it, there was really nothing positive about the national data releases covering July new and existing home sales figures released earlier this week.  But as the county-level data starts to roll in to our data platform, Housing IntelligencePro, we have been able to single out a few of the early reporting areas that managed to post gains in new home closings in July, and so we thought we’d feature them for our readers this week.

We looked at counties that had a least 300 new home closings over the last twelve months to gauge which, if any, were on the right track.  Since various county level data is not available at the same time, this certainly is not a comprehensive list yet.  Nevertheless, there are some interesting preliminary points of note.  Three of the eight counties listed are in North Carolina, including the largest volume county on the list, Onslo.  As you would expect, most of these counties are in growing areas that have had more resilient local economies than average, and most have very affordable housing.  The point being is that while there are always unique factors in local markets that drive housing one way or another in a particular month, traditional economic drivers of household growth and labor market strength are still the most reliable way to predict the strength of housing demand.

In broader news, equity markets have not had a pleasant week with the slew of bad data.  Stocks posted significant losses on Tuesday when the National Association of Realtors reported that existing home sales for July experienced its largest one-month decline on record.  Then the following day, the U.S. Census Bureau released figures that showed new home sales falling to a new all-time record low in the same month.  The DJIA has closed below 10k, and one could say optimism is not a prevalent attitude.  Although first-time unemployment claims dipped this past week, they remain at very high levels that reflect the current weakness in the U.S. labor market.

The Economy
First-time unemployment claims this past week declined for the first time in four weeks which helped allay some fears of further weakness in the U.S. job market.  Initial jobless claims fell by 31,000 to 473,000 in the week ended August 21st.  Initial unemployment claims remain higher than where they started the year and will only add pressure to the U.S. unemployment rate in the months ahead.

Housing Market
Home sales in July for both the new and existing home markets exhibited significant weakness which casts further doubt about the current condition of the U.S. housing market.

New home sales fell 12.4% in July to a new all-time record low seasonally-adjusted annual sales pace of 276,000 units.  New home sales have recorded declines in two out of the past three months following the expiration of the federal homebuyer tax credit while seasonally-adjusted annual sales pace in the past three months were the three lowest ever recorded.  New home sales for the previous three months were also revised lower by 9,000 units.  New home sales are down 32.4% from July of last year and are 42.1% lower than July 2008. 

Median new home prices in July declined to $204,000 from a revised price of $217,000 in June.  This is the second straight month that new home prices have declined and the lowest they have been since December 2003.  Prices are down 6.0% from the previous month and are 4.8% lower than they were this time last year.

In July, new home inventories declined from the previous month to 209,000 units on a non-seasonally adjusted basis.  New home inventory has now recorded 35 straight months of declines and has not recorded a monthly increase in inventory levels since May 2007.  Seasonally-adjusted inventory of unsold homes remained unchanged from the previous month at 210,000 units in July.  New home inventory levels on a seasonally-adjusted basis have not posted a monthly increase in six months and are currently sitting at new all-time lows.  Months of new home inventory jumped last month due to a significant drop in sales activity.  Seasonally-adjusted months of inventory jumped to 9.1 months in July from 8.0 months in June.

Existing home sales plunged 27.2% from June levels to 3,830,000 units.  This is the largest one-month drop for existing home sales on record and the slowest annual sales rate since July 1995.  Existing single-family home sales dropped 27.1% from last month to 3,370,000 units while existing condo and co-op sales fell 28.1% from June levels to 460,000 units.  Existing home prices were able to stay relatively stable despite the dramatic drop in sales activity last month. 

Median existing home prices in July declined slightly to $182,600 from $183,000 in June.  This was the first monthly price decline since February.  Median existing home prices are still 0.7% higher than they were this time last year.

Existing home inventory increased 2.5% from the previous month to 3,984,000 units.  Resale inventory is now back to its highest levels since April.  However, existing home inventory levels are still 1.9% lower than they were this time last year.  Months of existing home inventory jumped to a new record-high of 12.5 months due to the increase in inventory and the plunge in sales activity last month.

National average mortgage rates declined from the previous week to a new all-time low of 4.36% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on August 26th.  This is the sixth straight week that mortgage rates have set new record lows.  The average rate on a 30-year fixed mortgage has not recorded an increase in the past 10 weeks.

In the week ending August 20th, the MBA’s seasonally-adjusted purchase index increased 0.6% from the previous week but was down 39.23% compared to the same time last year.  The purchase index has posted increases in five out of the past six weeks but still remains near its lowest levels in almost 14 years.  The refinance share of mortgage activity increased to 82.4% from 81.4% in the previous week.  Refinance activity remains at historically high levels due record-low fixed mortgage rates.

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