Used Home Sales - July

Used home sales dropped about 3% from last month.

Used home sales appear to be hovering around a seasonally adjusted rate of about 5mn/yr, where they were in the late 90's.  It's interesting to see the effects of the ill conceived buyers credit had on the markets.  As would be expected it juiced sales by pulling forward demand.  The net effect appears to be no net effect on homes sales, but it cost the government considerably.

Inventories didn't change much, but have been trending lower overall since 2008.  There's a long way to go until they match the low levels of the early 2000's.  The seasonal decrease into the Winter should bring inventories down to around 3mn.  That should be a welcome improvement.

The Months of Supply of used homes remains elevated at about 9 months.  The effect of the buyers credit is also evident here.  As sales dried up after the credit months supply skyrocketed.

July used home sales came in around 450,000.  Used home sales show more seasonality than the new home market, and, the market is heading into the slower part of the season.  Used homes sales ought to average closer to 350,000/month for the next 6 months.  I suspect many disappointed "would be home sellers" will likely delist their homes helping relieve some pressure on inventory levels.  The remaining sellers will consist of those with motivation (ie Lenders).  Even though inventory levels may remain stable I would expect further pressure on used home prices.

Speaking of lenders, it is interesting to note that the number of mortgages entering the 90+ day category has been shrinking this year.  Delays, hassles and stalls have prevented many of the homes actually in foreclosure from entering the marketplace, but at least the pipeline is getting smaller.  Additionally, the GSEs have been selling more homes than they have been taking back which is a good sign, even though, they still hold a ton of homes.  Hopefully, it is moving in the right direction.

All charts from Calculated Risk.