Steel Markets

July Existing Home Sales Rebound from June

August 22, 2019

Home buyers in the U.S. bought more existing homes in July as mortgage rates continued to ease. The National Association of Realtors reports that existing-home sales rose 2.5 percent to a seasonally adjusted annual rate of 5.42 million after dipping in June. On a year-over-year basis, existing home sales were 0.6 percent higher last month.

Sales were strongest in the West, increasing 8.3 percent, followed by the South and Midwest at 1.8 percent and 1.6 percent, respectively. Sales in the Northeast fell 2.9 percent.

“Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said Lawrence Yun, NAR’s chief economist. However, he added that the supply of affordable housing is severely low. “The shortage of lower-priced homes has markedly pushed up home prices.”

Inventory decreased to 1.89 million from 1.92 million existing homes for sale in June. At the current sales pace, that is a 4.2-month supply, down from 4.4 months in June and 4.3 months a year ago. A six-month supply is considered a balanced inventory.

“Clearly, the inventory of moderately-priced homes is inadequate and more home building is needed,” said Yun.

“The job market still remains strong, but there is increasing economic uncertainty,” he said, adding “people may be hesitant to buy a home if they think we may be facing an economic recession.”

Median price for all housing types (single-family homes, townhomes, condominiums and co-ops) rose 4.3 percent year-over-year to $280,800.

Economists were at odds on the future of the housing market:

“Although lower mortgage rates are stirring the housing pot, a lack of pent-up demand, economic uncertainty and lofty prices in some major cities are keeping the market on low simmer,” wrote Michael Gregory, deputy chief economist at BMO Capital Markets.

Ian Shepherdson, founder and chief economist of Pantheon Macroeconomics, expects sales to pick up soon. “We are optimistic that the latter part of this year and the early months of 2020, at least, will see a significant upturn in sales. That, in turn, will boost construction activity in due course,” he said.