Strong retail sales earnings quickly took a backseat to more disappointment in the housing sector. Existing home sales laid a giant egg, declining to an annual rate of 5,440,000 down 1.3% from June and below consensus of 5,550,000. This is the lowest tally of 2017, and the weakest since August 2016, which means that burst of post-election excitement has faded.
But, I don’t think this is a demand problem. Supply continues to be very tight and prices have finally caught up to the industry. Median home prices declined to $258,300 from $263,300 from June as each region experienced a pullback.
The more pronounced declines came in the Northeast $290,000 from $296,000 and Midwest $205,400 from $211,500, as both regions also saw declines in sales.
Sales in the south rose 2.2% and west 5.0%.
Lower-end homes continue to see dramatic declines in sales even as first time buyers improved to 33% from 32% of total buyers. Note: that number has to get near 40% to signal a real housing recovery.
| % Change in Sales from 1 Year Ago | ||||||
|---|---|---|---|---|---|---|
| Region | $0-100K | $100-250K | $250-500K | $500-750K | $750K-1M | $1M+ |
| Northeast | -5.2% | -2.8% | 2.4% | 10.2% | 10.6% | 9.8% |
| Midwest | -11.9% | -2.8% | 9.9% | 3.4% | 16.2% | 13.1% |
| South | -19.6% | 0.7% | 13.3% | 16.9% | 10.9% | 22.5% |
| West | -18.5% | -15.7% | 1.9% | 13.1% | 18.1% | 24.9% |
| U.S. | -14.2% | -2.7% | 7.8% | 12.5% | 14.2% | 19.8% |
With the market meandering, it’s hard to see how it can find that spark going into the close. It’s not panic time, but more questions are being asked about the economy and Washington, D.C., and that is a problem.