Existing Home Sales Show Unexpected Decline
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Existing home sales for August fell by 2.7% to a 5.10mn annualized selling rate, compared to a Bloomberg consensus forecast of 5.35mn and a rate of 5.24mn in July.This is the first time in four months the index has experienced a decline. Single-family sales declined 2.8% in August to a rate of 4.48mn versus 4.61 million in July, while multi-family sales diminished 1.6% in August to 620,000 versus 630,000 in July. Median existing home prices fell to US$177,700 in August from US$181,500 a month prior. Despite weakness in the sales data the inventory of existing homes fell to 8.5 months from 9.3 months in July.
Presently it is hard to say what could have caused this unexpected decline, it could be an anomaly in an otherwise improving trend. Alternatively, as the Cash for Clunker’s program neared its end most consumers looking to take advantage of it had already done so. With this in mind, the US first time home buyer tax credit is set to expire in November; it may be possible a portion of buyers looking to take advantage of this program may have already purchased their homes. However, given that this is August data, and still relatively far off from November, I would be surprised if this had much of an effect. Nevertheless, it is something that should continue to be monitored in the months ahead. Increasing unemployment is also still providing some pretty strong headwinds toward the sector. New home sales will be released tomorrow.
In other news, initial jobless claims came in better than anticipated this morning declining by21K to 530K.
Unexpected decline?? Maybe if you walk around wearing rose colored glasses.
When housing prices fell to a reasonable range, those waiting on the sidelines finally went out and bought the house they had always planned to buy.
Now that those people have bought their homes, the demand for housing is… what it is. End of story.
This country needs to stop relying on the imaginary wealth created by equity in homes with artificial demand placed on them. We must accept that it will take time to rebuild our economy through hard work.
If you can’t stomach reality, I’m sure Barney Frank will think up a way to give away free money and destroy our economy further.