Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month. Existing homes (also known as home resales) account for a larger share of the market than new homes and indicate housing market trends. (National Association of Realtors) Why Investors Care
| Released on 9/25/07 For Aug 2007 | ||||||||||||
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Highlights
Existing home sales came in right at expectations, down 4.3 percent in August to a 5.50 million annual rate. Year-on-year, sales are down 12.8 percent. The drop, though expected, is still bad news -- as is a new record of supply, at 10.0 months. The median price showed some erosion, down to $224,500 for a 1.8 percent dip in the month. But the year-on-year price still shows firmness, up 0.2 percent and perhaps reflecting reluctance among homeowners to sell at a discount. But it doesn't seem that prices can hold up much longer given ballooning supply.
Declines in sales were roughly spread evenly through the country with the steepest drop in the West, down 9.8 percent, and the smallest in the Northeast, down 2.0 percent. Overall, single-family sales fell 2.0 percent in the month with condos down 8.0 percent.
The dollar slipped and Treasuries firmed in reaction to the data as well as to a lower-than-expected reading for consumer confidence. Weakness in home sales, and the prospect of greater weakness in home prices, is a central concern of the markets and Federal Reserve.
Existing home sales held steady in July at an annualized pace of 5.750 million versus 5.760 million in June. July's rate was the lowest in nearly five years and is down 9.0 percent year-on-year. Given the continuing decline in housing starts, markets will be focusing on whether supply is beginning to come down - which is needed before housing construction can pick back up. The supply number for July was disheartening, coming in at a record 9.6 months. We need both a rise in sales and a decline in supply but it might be October before we see improvement from the Fed's recent interest rate cut.
Existing home sales Consensus Forecast for August 07: 5.5 million-unit rate
Range: 5.3 to 5.7 million-unit rate
![[Chart]](chart.gif)
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Existing home sales reached a peak in mid-2005 and have been easing since. Typically, a distinct reverse relationship exists between home sales and mortgage rates. |
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