New Home Sales fell almost 2 percent in July, missing expectations of a 2 percent rise. Of course, this appeared worse given the revision to June’s figure being higher than originally documented. The media didn’t waste time jumping on the negativity but let’s make sure to highlight New Home Sales are up almost 13 percent from a year ago and new home inventory increased slightly.
Existing Home Sales were down 0.7 percent in July, also missing expectations, and are down 1.5 percent year over year. However, given the lack of inventory and modestly higher rates, this isn’t bad news but it’s also not what we want to hear. Homes are going under contract within a month of being listed. Distressed sales (foreclosures and short sales) made up only 3 percent of sales and is the lowest share since 2008 when the National Association of Realtors began tracking it.
Where is inventory up? Think pricier markets and the nation’s more expensive metros. Not exactly what you want to hear but San Jose, California, for example, saw a 44 percent increase in listings over the last year. The city also happens to rank third on the top 5 places where a downpayment is least affordable and can take someone a decade to save for a 20 percent downpayment. The median entry level home value is over $1.1M and takes almost an annual savings of $19K. The good news: Detroit still ranks as the most affordable city for median renters looking to hop the fence and purchase home.
First American’s Real House Price Index for June showed Michigan had one of the greatest year-over-year increases at 17.5 percent. Nevada showed the greatest with a 21 percent increase. The report is based on changes in single-family home prices, interest rates, and incomes. More specifically, “how much one can buy based on household income and the 30-year, fixed-rate mortgage.” Fortunately, consumers buy homes based on a monthly mortgage cost not the price of a home. The still low mortgage rates and growing household incomes continue to provide homebuyers with the opportunity to afford more home and borrow more.