Lawler: Early Read on Existing Home Sales in October

From housing economist Tom Lawler:

Based on local realtor/MLS reports across the country, I estimate that existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of about 5.08 million in October, down 4.0% from September’s seasonally adjusted pace. It’s difficult to gauge the extent to which last month’s government shutdown impacted closings last month, but weakness in contract signings prior to the shutdown suggest that last month’s decline in closings was mainly the result of higher mortgage rates and higher home prices. Weakness in closings was not uniform across the country – many Northeast markets, e.g., saw stronger YOY sales growth – but outside of the Northeast most markets saw a sales slowdown.

On the inventory front, most markets saw a “typical” seasonal decline in listings, but a number of markets actually saw an increase in listings – including many markets where the investor share of home sales has been higher than the norm over the last few years. Based on realtor/MLS reports AND on entities that track listings, I estimate that the inventory of existing homes for sale as measured by the NAR declined by 1.4% from the end of September to the end of October, which would imply that October listings would be up 3.3% from last October.

The government shutdown may have had a larger impact on contract signings, as several associations/MLS across the country reported YOY declines in new contract signings. Sadly, a large number of associations/MLS don’t report data on new contract signings to the public, and as a result it is difficult to construct “national” pending home sales measures consistent with the NAR’s pending home sales index (which I believe has some serious problems.)

CR Note: The NAR is scheduled to report October existing home sales on Wednesday, November 20th.