Existing Home Sales Still Outperforming


For 2017, I predicted no growth in existing home sales and total existing sales of 5,450,000. At that time, I didn’t believe we would have the demographics to push sales much higher. Also because selling equity is a problem for some would-be move up buyers, I believed the percentage of cash buyers in the market would fall to 16%-19%.  Today’s report on existing home sales from the NAR in part, supported my predictions for 2017. The percentage of cash buyers fell to a low of 18%.   We have been seeing over 20% + of sales made from cash buyers in the previous months, a trend which gave a slight boost to total existing home sales.  Today’s existing home sales may be disappointing to the many who have been clinging to an unrealistic forecast for unit sales demand in 2017. In my view, existing home sales are out performing my expectations for 2017.

NAR: Existing-Home Sales Retreat 1.8 Percent in June. NAREHS

Existing home sales hit a cycle high print in January of this year when inventory was at cycle lows. Inventory has been rising in recent months  and demand has fallen. So don’t fall prey to thesis that low inventory is holding back demand.

From Doug Short:

Existing home sales

As you can see, the  NAR data below shows that inventory has been rising from January but demand has not been growing. Similarly, the mortgage purchase application data has had it’s weakest year over year growth in years outside of 2014 when year over year growth was negative.

Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.6 months a year ago.

NAR In ventory

As for cash buyers, I predicted prints of 16%-19% for the year.  For the first time this year we got a print at that level. In some of the reports this year, cash buyers have been rising which surprised me and supported demand for 2017. The current report is the first time we see a noticeable decline in cash buyers, year over year.

First-time buyers were 32% of sales in June; Individual investors purchased 13%; All-cash sales were 18%; Distressed sales were 4%.

Some in the housing community will tell you we are experiencing record breaking demand and that we are in a inventory crisis.

What they won’t say is that mortgage purchase application data is only back to 1998 levels even with this long economic expansion, over 167,000,0000 million people working, rates below 5% since early 2011 and adjusting to population new home sales are below sales of 5 out of the last 6 recessions, even though monthly supply is higher in this cycle than any period from 1996-2005. This is a demand issue not a supply one. Selling equity is an problem.  Lack of equity means it is harder to move up and this is keeping inventory levels below 6 months. New home sales demand is still too low to warrant more building.  Also, inventory levels weren’t a problem from 2000-2005 when that data line had lower  monthly supply of inventory but had higher demand.

Existing home sales up just 0.7% in last 12 months. is citing inventories as a key factor. They are pretty low.


From Calculated Risk:


From Doug Short 


From Fred: New home monthly supply has always been higher in this cycle than the previous cycle 

New Home Monthly SUPPLY ALL TIME

Still, existing home sales continue to outperform and we are looking at 6 million total home sales for 2017.

On a side note, I had a good time at the National Association Of Women Realtors Business conference this past week in Costa Mesa, California. I gave a very bullish, pro-American economic outlook which seemed to shock a lot people. A brief outtake of my discussion:


Logan 5
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Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing marketLogan Mohtashami is a senior loan officer at AMC Lending Group,  which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data  daily on his own facebook page https://www.facebook.com/Logan.Mohtashami

2 thoughts

  1. What do you say about 300k and below homes (in the Charleston, SC, area)? Do they fit this mold? I agree with you when looking at the 300k and above homes. But when I look at my market charts here, I see a different story for 300K homes and below. I showed a house yesterday. First day on market. Had two offers already. There were about 20 agent cards on the counter. I am interested in what you have to say.

    1. 2 Points to that market place

      1. Builders have been building bigger and bigger homes for decades now. Median sq foot in 1975 was 1,500 and 2017 it’s still over 2,500. We don’t nor have been building smaller size home for decades.

      2. Tenure of housing is at all time highs right now which rarely gets talked about. This goes into my selling equity thesis. Post 1996 the only time the U.S. ever had 6 months supply was 2006-2011, those were the housing bust years and a lot forced selling.

      Now, Inventory monthly supply on trend has been higher for existing and new homes this entire cycle but we are missing 1.5 million to 2 million home sales from the previous cycle. Mortgage demand is only back to 1998 levels so for first time owners to move up more they need more equity because affordability for move up buyers is limited. My model at min needs 28%-33% selling equity, pay transaction cost and have the down payment dollars. Now, with more and more lower down payment loans for first time buyers, that process is taking longer .

      Builders don’t want to builder smaller homes, they can’t make money on them and existing homes are always going to be cheaper. So, don’t look for housing starts to get better until years 2020-2024, then demand from mortgage buyers will look a lot better, we will have more housing starts and better footing for selling equity. For new homes, every month in this cycle, monthly supply has been higher than any period from 1996-2005, so the demand isn’t there for them to build more homes

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