National Housing Inventory Down; Home Prices Up
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The recent spate of natural disasters has taken its toll on the housing market. The South saw a decline in closings in August due partly to Hurricane Harvey and the destruction it caused in the Houston area. Economists for the National Association of Realtors believe sales will continue to be impacted through 2017 in Houston and Florida, where residents are still dealing with the aftermath of Hurricane Irma. But sales in these regions should rebound in 2018.
Home Sales Are Down
Any rebound in sales would be welcome. Existing-home sales declined 1.7 percent to a seasonally adjusted annual rate of 5.35 million, marking August as the fourth month out of the past five in which sales fell. A month ago, sales reached 5.44 million. Sales increases in the Northeast and Midwest were tempered by drops in the South and West.
Diagnosing the Housing Market
Home sales might be down, but the demand among buyers for homes remains high. Employment rates are on the rise—as are income levels—while mortgage rates remain low. According to Lawrence Yun, chief economist for the NAR, "What's ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it's putting on prices in several parts of the country. Sales have been unable to break out because there are simply not enough homes for sale."
Fewer "For Sale" Signs
For the 27th month in a row, inventory levels have fallen year over year. By the end of August, there were 1.88 million existing homes on the market, a drop of 2.1 percent from July and 6.5 percent from August 2016. At the current sales pace, the housing stock will sell in roughly 4.2 months; in comparison, a year ago unsold inventory would have supplied the housing market for 4.5 months. The average length of time on the market for an existing home in August was 30 days, six days less than a year ago but unchanged from a month ago. Fifty-one percent of August sales remained on the market for less than 30 days.
High demand and low inventory have led to an increase in home prices. For an astounding 66 months in a row, home prices have climbed year over year. In August, the median existing-home price reached $253,500, an increase of 5.6 percent.
Regional Sales Data
Northeast - Existing-home sales annual rate of 720,000; an increase of 10.8 percent from July 2017 and 1.4 percent from August 2016.
Midwest - Existing-home sales annual rate of 1.28 million; an increase of 2.4 percent from July 2017 and 0.8 percent from August 2016.
South - Existing-home sales annual rate of 2.15 million; a decrease of 5.7 percent from July 2017 and 0.9 percent from August 2016.
West - Existing-home sales annual rate of 1.2 million; a decrease of 4.8 percent from July 2017 and an increase of 0.8 percent from August 2016.