- by New Deal democrat
For the last three years, the market for existing homes has been rangebound. While there may be some slightly upward pressure on prices, with the background financial fundamentals the same, the existing home market has reached a suboptimal equilibrium, with something like a -500,000 decline in housing inventory available compared with ten years ago; and rangebound sales as well.
That continued to be the case in August. Existing home sales declined a seasonally adjusted -2.0% monthly to 3.98 million annualized. Which continues to be well within its range of between 3.85 - 4.30 annualized for the past three+ years:
Historically prices follow sales, and so with rangebound sales, prices on a YoY basis have been relatively calm as well. These are not seasonally adjusted, so we look at them YoY. And since February of last year, there has been no YoY comparison higher than 3.0%. in August the YoY comparison was +1.9%:
This year the most lagging metric, inventory, has also fallen in line. In August, the YoY% change in existing home inventories was -0.6%. By contrast, as recently as last December it was up 7.9% YoY, and in March was up 4.5% YoY:
For the last two months, I have introduced my look at the existing home sales report as follows: “The housing market has reached a new, suboptimal equilibrium in sales, construction, prices, and inventory. Until some new positive or negative shock occurs (like a surprise new Fed hiking regimen), expect little change in this important leading sector of the economy, which is needless to say neutral for forecasting purposes.” That suboptimal static equilibrium continued again in August.
