- Existing home sales fell sharply in July, and falling inventory continues to hold back home sales from reaching their pre-recessions average.
- Existing inventory in July dropped noticeably from the previous year, and controlling for seasonality and the number of households in the U.S., is the lowest on record.
- Comparing yesterday’s stellar new home sales numbers with today’s existing home sales tells an important tale of two housing markets. Homebuilders continue to thrive on healthy demand while homebuyers remain stifled by anemic inventory.
Existing home sales dropped sharply by 3.2% in July to an annual rate of 5,390,000, which is down from June’s 1.8% increase. When compared to the pre-recession average and adjusting for the fact that there are more households in the U.S., July’s numbers are about 82.9% back to normal. This is a sharp drop from 85.6% last month.
Why are existing sales slow to come back to normal? Inventory woes. Inventory fell 5.8% year-over-year. However, inventory looks significantly worse when controlling for seasonality and the number of households in the U.S. Taking seasonality and the number of U.S. households into account, existing inventory is now the lowest on record (since January 1999). Comparing yesterday’s stellar new home sales numbers with today’s existing home sales tells an important tale of two housing markets. Homebuilders continue to thrive on healthy demand while homebuyers remain stifled by anemic inventory.
