“Can you hear me now?” (Paul Marcarelli) July home sales figures spoke loud and clear regarding the impact low inventory is having on potential buyers.
Existing home sales decreased 0.7 percent to a seasonally adjusted annual rate of 5.34 million in July from 5.38 million in June, the National Association of REALTORS® reported. This was their slowest pace in more than two years and 1.5 percent lower than July 2017. Sales have also declined on an annual basis for five straight months. Losses were seen in the Northeast, Midwest and South, with gains in the West. Unsold inventory is at a 4.3-month supply, well below the 6-month supply seen as normal.
Lawrence Yun, the NAR chief economist, said, “Too many would-be buyers are either being priced out, or are deciding to postpone their search until more homes in their price range come onto the market.”
New home sales also fell from June to July, though inventory is closer to normal levels. July sales came in at an annual rate of 627,000, 1.7 percent below June’s revised total of 638,000 (up from 631,000). While sales were down month-over-month, they were up 12.8 percent from July of last year. July sales plunged in the Northeast and fell slightly in the South, while the Midwest and West saw solid gains. There was a 5.9-month supply of new homes available on the market, nearer to the 6-month level considered normal.
In his speech at the Jackson Hole Economic Symposium, Fed Chair Jerome Powell noted that the Fed expects strong economic growth to continue and that there aren’t any clear signs inflation will rise above the Fed’s target range of 2 percent. Low inflation is typically good news for fixed investments like mortgage bonds and the home loan rates tied to them.
Mortgage bonds have trended higher in recent weeks despite some reversals in the latest week. Home loan rates have reached some of their best levels of the year and remain near historic lows.
This week features key reports across a wide range of sectors.
- Look for housing news with the S&P/Case-Shiller Home Price Index on Tuesday and Pending Home Sales on Wednesday.
- Consumer Confidence and the Consumer Sentiment Index will be released on Tuesday and Friday, respectively.
- Gross Domestic Product will be delivered on Wednesday, providing data on economic growth.
- Look for Personal Income, Personal Spending, Personal Consumption Expenditures and weekly Initial Jobless Claims on Thursday.
- Chicago PMI will deliver manufacturing news on Friday.
If you or someone you know has questions about home loans, give me a call. I’m happy to help.