According to the model, July saw an increase in potential existing-home sales to a seasonally adjusted, annualized rate of 5.82 million, up 0.2% from the previous month. The growth translates to a 93.7% increase from the record low for market potential posted in December 2008. On a year-over-year basis, the market potential for existing-home sales in July rose by 0.1%, or a gain of 6,000 sales on a seasonally adjusted, annualized basis.
Potential existing-home sales are currently at a seasonally adjusted, annualized rate of 541,000, which is 9.3% below the July 2005 peak of market potential.
First American said the existing-home sales market is underperforming its potential by 4.7%, representing estimated sales at a seasonally adjusted, annualized rate of 273,000. The underperformance comes as market potential increased by an estimated 10,000 sales between June and July.
“Lack of supply continues to be the main story of the 2017 housing market. Just a few months ago, the difference between the actual level of existing-home sales and the market’s potential was negligible, but supply issues have become a significant impediment and are preventing the market from reaching its potential,” said Mark Fleming, chief economist at First American. “The number of existing homes listed for sale has been declining for over two years and the number of new homes added to the market has been insufficient to meet demand. Millennials are entering the housing market, but are confronted with very few entry-level homes to buy.”
July supply hits 13-year low in this Northeast market
July home sales dipped but pace near 10-year high
The real estate market is not performing up to its potential, First American Financial said as it updated its potential home sales model for July.