Lawler: Early Look at Existing Home Sales in August

From housing economist Tom Lawler:

Based on publicly-released reports from various regional realtor associations/MLS, I estimate that existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of about 5.35 million in August, down 0.7% from July’s pace. Folks who track local realtor reports but just focus on YOY trends might find this estimate surprisingly high, as the raw data suggest a sizable slowdown in YOY home sales growth in August compared to July (about 9 1/2% for August, compared to 20.7% for July). However, one must recall that (1) last August seasonally adjusted existing home sales were 5.2% higher than last July’s pace; and (2) there was one fewer business day this August compared to last August, while this July had one more business day than last July.

While not enough local realtors/MLS report new pending home sales to the public for me to derive an accurate estimate for national pending sales, many (though not all) that do reported significant (and larger than seasonal) declines in pending sales last month. My “gut” based on the data I’ve seen is that the NAR’s pending home sales index in August will be down about 5% from July.

On the inventory front, based on data from listings trackers and, local realtor association/MLS reports I estimate that the NAR’s estimate of the number of existing homes for sale at the end of August will be 2.31 million, up 1.5% from July and down 3.75% from last August.

CR Note: The NAR is scheduled to report August existing home sales on Thursday, Sept 19th. The consensus is for sales of 5.25 million on seasonally adjusted annual rate (SAAR) basis.

Based on Tom's estimates of a 5.35 million sales rate, and inventory at around 2.31 million for August,  months-of-supply will be around 5.2 (up from 5.1 months in July). This would still be a very low level of inventory - probably the lowest for August since 2003 or so - also a 3.8% year-over-year decline in inventory would be the smallest year-over-year decline since March 2011.  Note: In July inventory was down 5.0% compared to July 2012.   These smaller year-over-year declines suggest inventory bottomed earlier this year.