Photo: Maju Rezende/Flickr
Both existing and new home sales have managed to meet or exceed expectations in the months leading up to July, but sales are now expected to drop according to a new market forecast by Zillow.
Existing home sales have remained buoyant in the four months leading up to July, despite tight inventory, but a 1.9 percent drop month-over-month is expected in July according to the real estate search portal. The firm is expecting home sales to decline to a seasonally adjusted annual rate (SAAR) of 5.45 million, down 0.03 percent year-over-year, as tight inventory and rising prices take a toll on says.
Additionally, the summer months tend to be the height of the home buying season, and this year’s data suggests buyers may have begun house hunting earlier than in previous years in order to get ahead of the competition.
New home sales are expected to fall 6.65 percent, to 553,000 units (SAAR), despite having remained strong for the past eight months — this would make for the largest month-over-month decline since September 2015.
The decline would still leave new home sales up 11 percent over the year, a sign of how strong the new home sales market has been for 2016 thus far says Zillow.
In a separate report published by real estate search site and brokerage Redfin, the company’s chief economist Nela Richardson sheds some additional light on the July sales slowdown.
Existing home sales in July saw an 11 percent decrease year-over-year and 12 percent decrease month-over month. Median sales prices also increased 5.3 percent year-over-year to $273,500 and new listings slid 6 percent year-over-year. Inventory grew even tighter with a drop of more than 6 percent for the third consecutive month.
And, while July posted the largest national sales decline since April 2011, the slowdown may have more to do with the calendar than actual buyer demand, says Redfin.
There were fewer business days to close sales in July than previous months. July had five full weekends and one national holiday, leaving just 20 days available for home closings.
Other factors were also at play in the July sales slowdown, says Redfin. Election anxiety, stock market queasiness and general economic malaise combined with the lack of available homes on the market to drive sales lower. Redfin attributes roughly a third of the July sales decline to these slowing market trends.
“All else equal, we’d expect the number of homes sold throughout the U.S. to be 7.5 percent lower in July 2016 than it was in July 2015, simply because of the way the days laid out on the calendar,” says Pete Ziemkiewicz, Redfin’s director of analytics.