US home sales continue to float in a healthy range as suggested by trends in the Ten-X Nowcast, according to a report from Ten-X [1]. Despite facing some challenges, Ten-X reports that underlying demand for housing remains strong thanks to the firm labor market, low unemployment, low mortgage rates, and improving wage growth, and that these conditions remain supportive of the housing market, although this demand is hindered by tight inventory levels, in turn increasing price growth and eating into affordability prospects.
The report suggested July home sales would be range-bound and they state that the latest Nation Association of Realtors [2] (NAR) release confirmed this, showing a 3.2 percent decline to a seasonally adjusted 5.39 million rate. In addition, the July sales rate marked a 1.6 percent year-over-year decrease.
The report also states that the NAR data release confirmed what the median home price Ten-X reported last month, as the median existing-home price for all housing types was $244,100 in July. This was a 5.3 percent higher than a year ago. This also marks the 53rd consecutive month of annual gains.
Additionally, the report states that NAR reported that total housing inventory saw a marginal gain in July to 2.13 million existing homes for sale. This was 0.9 percent higher than last month but still 5.8 percent below last year’s level. Ten-X reports that tight inventory levels continue to hold back sales growth but the trend of moderate increases in homes for sale continues as they had anticipated due to higher pricing attracting more sellers into the market.
The share of all-cash sales measured 21 percent in July according to the report and this was down from 22 percent in June and 23 percent from a year ago. They state that this represents the lowest percentage since November 2009. Additionally, distressed sales, including foreclosures and short sales, measured 5 percent in July. This was a decrease from 6 percent last month as well as 7 percent from a year ago. Likewise, they state that this is the lowest percentage since NAR began tracking such data in October 2008 and a continuation of what they call the normalization of the housing market from the aftermath of the housing bust.
Ten-X notes that though this month’s headline sales figure was less encouraging, they still believe that the high overall sales level continues to signal the health of the housing market. Ten-X reports that for August, they believe existing-home sales will stabilize and place August sales in the 5.35 million-5.71 million range, with a targeted rate of 5.53 million. Additionally, this is a marginal 0.5 percent decrease from Ten-X’s July report, and would represent a 2.6 percent gain from the NAR sales rate.