In 2018, I wrote:
“I am looking for sales to trend flat to negative between 4.92- 5.29 million with slightly more inventory in 2019, but not a dramatic difference.”
As of today, we are trending at 5,298,750, this is still a total negative growth for the year, but the trend is getting a lot better.
I talked about this yesterday with the housing starts data. Think V shape housing recovery for 2019.
Housing It’s Alive It’s Alive
With 8 months of data in for 2019, we are trending barely negative with inventory rising a little year over year in total. However, inventory was down in this report on a month to month basis and year over year. As sales pick up, inventory falls. Incredibly, sales can grow when we have no homes to buy (Wink). As of now, existing home sales are beating my estimates. Even though total sales might be just a tad negative this year as long as sales trends are above 5,290,000 its a beat in my eye.
From the NAR:
Total existing-home sales1, https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums, and co-ops, rose 1.3% from July to a seasonally adjusted annual rate of 5.49 million in August. Overall sales are up 2.6% from a year ago (5.35 million in August 2018).
Everything looks right to me; in fact, it looks better! I have to remind my readers that housing is always plagued by two houses. They either overhypes short-term data to up and to the downside. We either have super housing bulls or bears, but the actual game was in the middle, which I know isn’t sexy to report.
The reality is that 2019 is already going to be another good year. As long as you maintain a realistic approach to demand. Purchase application data is at cycle highs, but the rate of growth during the heat months year over year was only trending at 3.7%.
We have shown positive growth now for 2 months, and those were the harder comps. We will have much easier comps to show growth for the next 5 months.
Overall sales are up 2.6% from a year ago (5.35 million in August 2018). #NAREHS
As a % of sales, cash buyers have had more sub 20% prints this year than any time in this cycle, and sales are still holding up well year over year.
While sales are still trending barely negative in 2019, and inventory is barely up the existing home sales market is healthy. The figure in today’s report is a legit beat in my mind. If one maintains a realistic outlook on the current state of housing economics, then the lack of total growth in existing home sales shouldn’t be a surprise. Demand from mortgage buyers during the years 2008 to 2019 has been and will continue to be slow and steady with record-breaking demand from cash buyers. Growth in the U.S. housing market hinges on increasing the number of mortgage buyers while cash buyers remain stagnant or fall. The question for the future of U.S. housing economics is if housing tenure will begin to decline when birth rates grow in the years 2020-2024.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan 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