Key Takeaways:
- Sales are pacing at an annual rate of 6 million units.
- July inventory of existing homes for sale rises a sharp 7.3% over June.
- Median home prices register a modest monthly drop but remain 12% higher than a year ago.
By Manuel Gutierrez, Consulting Economist to NKBA
Similar to the new home picture, sales of existing homes saw a 2% uptick in July to a six million unit annual rate. July marks the second month of gains, following four consecutive monthly declines.
Home sales in each month this year remain above the corresponding month of 2020 (Figure 1), although the month-to-month gap narrowed significantly in July, with sales just 1.5% higher than in 2020.
It remains to be seen whether home sales through the end of the year will exceed last year’s volumes, when the housing market was booming.
Inventory of existing homes continues to improve as well, with gradual increases in supply. The total July inventory of homes for sale rose to 1.32 million, up sharply by 7.3% over June levels. There were currently nearly 300,000 more homes for sale in July than at the beginning of 2021.
July’s inventory of existing homes for sale is at its highest level since last September.
The inventory, however, is still 12% below its level of a year ago, when there were 1.5 million homes for sale.
The current inventory level translates into a 2.6 month supply (Figure 2). This is also an improvement over the last few months. In fact, the months’ supply is higher than what it was in any month since September 2020, when it was a shade higher at 2.7 months.
July’s improved inventory levels resulted in a modest drop in prices. Compared to the previous month, the average price was down 0.7% to $379,000, although it’s still 12% higher than the same month last year (Figure 3).
The median price of existing homes also fell modestly in July, by 0.8% to $359,000. However, it is sharply higher than a year ago: up nearly 18%.
July home sales increased in three of the four regions (Figure 4). The biggest gain was in the Midwest, with sales rising 3.8% for the month to an annual rate of 1.38 million homes. However, compared to last year, this is the only region still posting lower sales, although they are off by only 1.4%.
The West posted the second-highest gain, with sales of existing homes jumping 3.3% to an annual pace of 1.24 million units. This gain brought sales to the same levels as last July. In the South, which generates the most home purchasing activity — 43% of the U.S. total — sales were up 1.2% to 2.83 million units (annualized). Compared to last year, sales are also higher, up 1.2%.
Finally, sales in the Northeast were unchanged from June levels, but are 12.1% higher than a year ago.
Along with the drop in home prices at the national level, three of the regions posted modestly lower prices in July. The only exception was the West, which, with an average price of $500,000, saw home prices tack on a modest 0.3% in July.
The average price of a home sold in the West is nearly a third higher than the national average.
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