In a rare and very welcome sign of strength in the housing sector, existing home sales surged a monthly 7.7 percent in August to an annual rate of 5.03 million, well above Econoday's 4.75 million consensus. All regions show gains with strength centered in the key single-family component where sales surged 8.5 percent. In year-on-year terms, sales are up an impressive 18.6 percent but do show slightly less strength than July's year-on-year rate of 21.0 percent.
The sales surge drew supply on the market down by 3.0 percent to 3.577 million units. In terms of months at the current sales rate, supply fell sharply, to 8.5 months for the best reading since March and vs 9.5 months in the prior month.
On the negative side, price readings fell to suggest that at least some of the sales strength is tied to price reductions. The median price fell 1.7 percent to $168,300 with the average price down 1.6 percent to $216,800. Year-on-year price contraction is slowly deepening, at minus 5.1 percent for the median and minus 4.0 percent for the average.
The National Association of Realtors, which compiles the report, calls August's strength impressive especially given disruptions tied to Hurricane Irene which swept some of the South and much of the Northeast at month end. Note that sales in the Northeast showed the least strength of any region, a factor that points to possible pent-up demand in the region for this month. Still, the association warns that cancellations are high and that credit remains tight. But if extended in the months ahead, the improvement in today's report could mark a pivot higher for the housing sector which has been the hardest hit of all areas of the economy. But financial markets, focused on today's FOMC announcement, are showing no significant reaction to today's report. Data on new home sales, which have been the weakest part of the housing sector, will be posted Monday.
Market Consensus before announcement
Existing home sales fell 3.5 percent in July to a 4.67 million annual rate and followed a 0.6 percent rise in June. Supply on the market at the current sales pace turned higher to 9.4 months from 9.2 and 9.1 in the two prior months. In turn, the median price slipped 0.9 percent to $174,000 and down 0.8 percent for the average to $224,200. Year-on-year prices, which had turned positive in June, are back in the negative column, at minus 4.4 percent for the median.