Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Existing Home Sales Declined 0.9% in August
Posted Under: Data Watch • Home Sales • Housing

 

Implications:  Sales of existing homes weakened modestly in August as inventories continue to decline and prices trend higher.  Sales of previously owned homes fell 0.9% in August to a 5.33 million annual rate but are still up 0.8% from a year ago.  Despite today's sales pace being the second slowest of the year, we do not think this is the end for the housing market.  Housing is volatile from month to month, and we think the broader trend will continue to be upward, although there are still some headwinds.  Tight supply and rising prices continue to hold back sales.  Inventories fell 3.3% in August, and have now fallen for fifteen consecutive months on a year-over-year basis.  Further, the months' supply of existing homes – how long it would take to sell the current inventory at the most recent selling pace – is only 4.6 months.  According to the National Association of Realtors® (NAR), anything less than 5.0 months is considered tight supply.  The good news is that demand was so strong that 46% of properties in August sold in less than a month, pointing to further interest from buyers in the months ahead.  However, higher demand from the summer selling season also helped push the median price for an existing home up 5.1% versus ago.  While this may temporarily price some lower-end buyers out of the market, it should ultimately help alleviate some of the supply constraints as "on the fence" sellers take advantage of higher prices and trade-up to a new home, bringing more existing properties onto the market as well.   In other housing news this morning, the FHFA index, which measures prices for homes financed with conforming mortgages, increased 0.5% in July and is up 5.8% from a year ago.  Another sign that supply remains limited and home builders have room to keep ramping up construction.  More broadly, new claims for unemployment benefits declined 8,000 last week to 252,000, marking the 81st consecutive week below 300,000. Continuing claims declined 36,000 to 2.11 million.  It's still early, but plugging these figures into our models suggests a September payroll gain of about 175,000, more than enough to keep the Fed back on track for higher rates in December.

Click here for PDF version

Posted on Thursday, September 22, 2016 @ 11:56 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2020 All rights reserved.