US existing home sales rebounded significantly in August, when compared to July, besting analyst expectations. Inventory levels dropped slightly, though, while median sales prices increased slightly. See the following article from The Street for more on this.
Existing-home sales rebounded 7.6% in August to a better-than-expected seasonally adjusted annual rate of 4.13 million units, the National Association of Realtors said Thursday morning. Economists had expected the figure to come in at 4.1 million units, compared with an upwardly revised 15-year low rate of 3.84 million units sold in July.
The inventory of unsold homes on the market fell 0.6% to 3.98 million units, an 11.6-month supply at the current sales pace, down from a 12.5-month supply in July. The national median existing-home price for all housing types pushed up 0.8% to $178,600 in August, according to the NAR’s report. Distressed homes rose to 34% of sales in August from 32% in July; they were 31% in August 2009.
“The housing market is trying to recover on its own power without the home buyer tax credit,” said NAR chief economist Lawrence Yun. “Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual because of lingering economic uncertainty.”
“Home values have shown stabilizing trends over the past year, even as the economy shed millions of jobs, because of the home buyer tax credit stimulus,” Yun added. “Now that the economy is adding some jobs, the housing market needs to steadily improve and eventually stand on its own.”
Existing-home sales plummeted to a 15-year low of 3.84 million units in July, the lowest level since the total existing-home sales series launched in 1999. Single-family homes were at the lowest level since May of 1995, plummeting 27.1% in July to a seasonally-adjusted annual rate of 3.37 million, from a pace of 4.62 million in June, and 25.6% below year-earlier levels. Single-family homes account for the bulk of all existing home sales.
Stocks in the homebuilder sector were mixed immediately following the existing-home sales report. The SPDR S&P Homebuilders(XHB_), an exchange-traded fund that tracks the homebuilder sector, rose 0.1% while the iShares Dow Jones US Home Construction(ITB_) also edged up 0.1%.
Shares of NVR(NVR) gained 0.2%. D.R. Horton(DHI) lost 0.5%, off earlier lows, PulteGroup(PHM) 1.2% and Toll Brothers(TOL) 1.3%.
Lennar(LEN_) added 0.9%. Lennar said Monday it returned to year-over-year profitability , beating quarterly expectations on higher revenue and a greater number of home deliveries.
A report on new-home sales in July is due to be released on Friday. The consensus call is for sales of newly built homes to have risen to a seasonally adjusted annual rate of 291,000 in August according to estimates from Briefing.com.
New-home sales fell 12.4% in July to an all-time low rate 276,000. The figure came in well below expectations for a rate of 334,000 after a revised rate of 315,000 in June.
The housing market has been under tremendous pressure for some time, and demand fell further after the springtime expiration of federal tax credits for homebuyers. Most analysts agree the situation is likely to get worse before it gets better.
Near-record-low mortgage rates have failed to spark demand for housing in recent months, but clearly had an effect on homeowners looking to lower their monthly payments through refinancing.
The average rate on a 30-year fixed mortgage fell to 4.44% last week, from 4.47% the week earlier.
A total of 81.1% of all mortgage loan applications last week were for refinancing existing mortgages, up from 80.5% in the prior week, according to data released by the Mortgage Bankers Association on Wednesday. Even so, mortgage applications fell for the third straight week even as mortgage rates remained near all-time lows.
We recently asked our readers if another round of homebuyer tax credits would help or hurt the economy. Readers of TheStreet overwhelmingly agreed that another homebuyer tax credit would benefit the housing market and the entire economy. Out of 207 votes, 62.3% respondents voted yes while 37.7% vote no, viewing another tax credit as simply barking up the wrong tree.
The housing market saw sales ramp up in March and April as consumers rushed to take advantage of tax credits that offered as much as $8,000 for first-time homebuyers and $6,500 for repeat buyers. Following the expiration of those credits on April 30, the market saw a dramatic decline in demand for the month of May that spilled over into June and July. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.
This article has been republished from The Street. You can also view this article at The Street, an investment news and analysis site.