There has been a lot of evidence of late that the market might be shifting to a pattern more favorable to buyers than sellers. This week the picture got both clearer and a little pixelated. Data on September’s new, existing, and pending sales all came out and the first two continued what has become a pretty well established downward trend. Pending sales, which has the status of a leading indicator, could be indicating a turn-around.
Existing home sales have failed to gain ground for six straight months; the last increase was in March. Sales were unchanged from July to August and this week the National Association of Realtors (NAR) reported a 3.4% decline in September. The seasonally adjusted annual rate of sales of single-family houses, townhouses, condos, and cooperative apartments at 5.34 million units is 4.1% lower than the rate in September 2017. Even though sales appear to be stalling, inventories are still low and declined again in September after a month or so of improvement.
In August new home sales finally broke out of their slump, posting the first increase since March, a solid 3.5%. It didn’t last long. In the Census Bureau report for September, not only did sales fall 5.5% from August’s number, but that month’s gain was revised out of existence. The annual rate of 553,000 sales in September is 13.2% lower than the rate one year earlier.
One month does certainly not a trend make, for proof see new home sales above, but pending sales did have positive numbers in September, the second good report in the last six months. NAR reported contract signings were up 0.5%, but that still left them lower on an annual basis (by 1.0%) for the ninth straight month.
Effects of Florence
The South was a drag on all three home sales reports, quite probably because of Hurricane Florence that hit mid-month. But existing home sales were lackluster–either down or unchanged–everywhere. They declined by 3.6% in the West, putting that region back 12.2% compared to last year.
New home sales also fell in every region but the Midwest, and by a whopping 40.6% in the Northeast. That makes the West’s decline of 12.0% look relatively benign.
Pending Sales were pushed higher principally by strong numbers in the Midwest (up 1.2%) and the West. Although the latter region posted a 4.5% improvement over August, it lags the previous September by 7.4%.