This July Was Hot for Housing

It’s the end of August and the perfect time to review the most important trends in housing data we’ve seen over the last month.

Due to the nature of economic data, most of the data released in August covered July, and it’s important to note that in many ways this was the best July we’ve seen in at least seven years.

On the jobs front, we learned at the beginning of the month that July continued the streak to six straight months of 200,000-plus jobs created. The six-month average through July was 244,167, and the 209,000 figure for July was the best for the month of July since 2005.

The increases in employment—and the underlying improvement in quality of the jobs being created—are boosting consumer confidence.

The July reading of the Conference Board’s Consumer Confidence Index was at 90.3, the highest monthly reading since December 2007. It was the best July reading since 2007. And we learned this week that the index increased to 92.4 in August.

Existing home sales for July came in at a rate of 5.15 million, which was the fourth straight month of increases. This was not the highest reading for July over the last eight years—last July had that distinction with 5.38 million sales.

But as the National Association of REALTORS® reported, distressed sales only made up 9% of the July figure—the lowest reading since October 2008, when the organization started tracking the category.

Last July, 15% of existing home sales were distressed. Take away the distress share difference, and last July’s 5.38 falls to 5.06, meaning this July was the best July for healthy existing home sales in eight years.®’s July inventory metrics point to positive, healthy momentum with listings up year-over-year and month-over-month. Increased inventory is supporting more healthy sales and is in line with increasing demand as we also saw improvement in the median age of inventory and median prices year-over-year.

The various price metrics reported for June and July indicated continued monthly deceleration from the too-hot appreciation levels the market experienced in 2013.

But, appreciation is still higher than long-term “normal” rates.

From the various metrics, it appears home values are increasing at an annualized rate in the range of 4.9 to 8.1%. NAR’s median price for existing homes in July was $222,900, the highest July median price since 2007.

The only major negative metric for housing came from new home sales, with the July estimated seasonally adjusted annualized rate at 412,000—which would be a decline of 2% from June.

Note I said would be, since the initial estimate was not statistically significant from the June number. The small sample survey used to estimate these numbers has been very noisy and is prone to revisions.

But if we take the initial July estimate as fact, it ironically is the strongest July reading since 2008.

Thus, the economy and housing entered the third quarter with more momentum than we have seen since the dark clouds of the downturn started gathering.

The data all point to 2014 ending much stronger than any year since 2006.




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