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Existing Home Sales: Surprise Rebound, Trend Still Decelerating

August 23, 2021
Bottom Line: Sales rebounded in July, beating expectations for a slight decline as inventory increased modestly, easing the tight supply conditions slightly.  Month's supply increased to 2.64 months, up from an average of just 1.9 months in 2020 but still well below a "normal" six-month level.  The average sales price eased slightly, down to 378k, as the composition of sales skewed slightly towards lower-priced homes in July.   The trend in home prices remains higher.  And the trend in sales also remains higher but is decelerating modestly as affordability remains a major issue for many homebuyers, even with sub-3% mortgage rates in many cases.  Overall, the housing market remains tight, but the pace of activity has decelerated, suggesting the housing tailwind for GDP growth will be notably lower in the 2nd Half of 2021.
Existing Home Sales ROSE by 2.0% in July to 5.99 million, compared with market expectations for a decline to 5.83 million. The prior month was revised up from 5.86 to 5.87 million.

Home re-sales are now 1.5% ABOVE their year-ago level.
The Inventory of Homes Available for Sale
ROSE by 7.3% to 1,320k but are still 12.0% BELOW  their year-ago level. Because inventories increased while sales increased, the Months Supply ROSE to 2.6 months from 2.5 months.  This is BELOW the 6 month level that is considered 'normal'.   
Home Prices ROSE compared to their year-ago levels. Average home prices are 12.0% ABOVE their year-ago levels while median home prices are 17.8% ABOVE their year-ago levels.