Dwindling Inventory, Glass Half Full

Home sales in August fell slightly, according to a recent report from Ten-X. The Ten-X Residential Real Estate Nowcast predicts a 0.1 percent decrease in home sales for August. The nowcast reports that sales will hit a seasonally adjusted rate (SAAR) between 5.33 and 5.68 million with a targeted number of 5.43 million.

"Existing home sales are in a classic 'glass half full/glass half empty' situation right now," said Ten-X EVP Rick Sharga. "While sales in August should be up slightly from last year, our nowcast model shows that they'll continue their downward trend and be lower than July sales. The combination of falling inventory and rising prices is proving to be a difficult hurdle for the market to overcome."

Last month’s Nowcast had predicted a slight drop in home sales, which was confirmed by the National Association of Realtors (NAR) data. In July, total existing home sales fell to a seasonally adjusted rate of 5.44 million, 1.3 percent lower than in June when the rate was 5.51 million. Ten-X notes that this is still 2.1 percent higher year-over-year.

Meanwhile, home prices have risen. Ten-X predicted an increase in home prices, which was confirmed by data from NAR. The median existing home price for all types of housing went up by 6.2 percent year-over-year in July.

"US home sales are bouncing around at an elevated level amid a number of continuing crosscurrents," said Ten-X Chief Economist Peter Muoio. "On one hand, a firm labor market is lifting demand for homes, while on the other, tight inventory levels have limited home sales growth. And, although the resulting price gains continue to benefit existing homeowners, they also erode affordability, effectively sidelining potential buyers. While a couple of months of data is hardly confirmation of a trend, the recent decline in sales is worth monitoring to see if home sales are beginning to lose steam."