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Highlights
The momentum in housing data has hit a bump as existing home sales ended four months of gains, down 2.7 percent in August to a 5.10 million annual rate that falls well short of expectations for 5.35 million. The dip wasn't lopsided to any of the two categories, split between single family homes, down 2.8 percent, and condos, down 1.6%. Regional data were also balanced showing low to mid-single digit percentage declines in the Northeast, Midwest and South and a low single digit gain in the West.
Better affordability has been underpinning sales as it likely did in August as well. The median price fell $4,500 to $177,700. Distressed sales made up 31 percent of total sales, unchanged from July. The National Association of Realtors (NAR), which compiles the report, is upbeat, noting that August's results are respectable given strength in July and saying that the sector is "very close" to self-sustaining recovery. The $8,000 first-time buyer credit will end Dec. 1.
The supply side is a big plus in the report, down 10.8 percent in the month to 3.622 million homes now on the market. Supply relative to the pace of sales is at 8.5 months, a 2-1/2 year low and vs. July's 9.3 months and 10.6 months a year ago.
Tomorrow's new homes sales report was expected to show a fifth straight gain as was this report, though today's results may subdue though expectations a bit. Markets are definitely reacting to the report with the S&P down several points and the dollar index up from 76.12 to 76.40. Commodities are moving lower as the play between safety and risk turns back to safety. A final note is that pending home sales, which are on a climb, sent a bad signal for this report which the NAR suspects reflects more stringent or even faulty appraisals that are scuttling sales.
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Market Consensus Before Announcement
Existing home sales rose a spectacular 7.2 percent to a 5.24 million annual unit rate for July and the fourth consecutive increase. The July surge was the largest on record for the total existing-home sales series dating back to 1999. But sales were boosted by lower prices due to foreclosures and distressed sales. Distressed sales tend to have prices 15 to 20 percent lower than otherwise. The median sales price dipped another 2.0 percent in July to $178,400 and was down 15.1 percent year-on-year. Looking ahead, it would not be surprising to get some reversal of July's surge. But with the first-time homebuyer incentive ending soon, there still could be a boost in sales in August to beat the deadline for sales to close by November 30.
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