The National Association of Realtors reported existing home sales for July at a seasonally adjusted annual rate of 5.42 million. That’s 2.5 percent better than last month according to NAR’s revised figures, and up 0.6 percent from July of last year. All it took was a complete capitulation by the Federal Reserve on policy normalization and a dramatic 75 basis point drop in mortgage rates.
The median price of a home in July was $280,800, up 4.3% from last year. The average price of an existing home sold in July was $317,100, a rise of 3.1 percent from a year ago. The supply of existing homes for sale stood at 4.2 months in July, down from 4.3 months a year ago.
Existing home sales have been trailing new home sales for the last several months in the Dallas-Fort Worth area. This is largely a result of inflated home prices. You can see from the attached chart that U.S. existing home sales peaked in November 2017, and they have yet to eclipse the current cycle highs, even with the gift of dramatically lower interest rates.
On the bright side, I received an email from a local lender yesterday informing me that the HUD’s FHA down payment guideline revisions have been mothballed. FHA borrowers can still buy a home with absolutely no skin in the game, having both the down payment and closing costs paid by someone else. In other words, taxpayers will be on the hook yet again if the housing market buckles.
The Federal Reserve has done another excellent job of blowing an echo bubble in real estate. This is particularly true for the Dallas Fort Worth area, where prices are at record highs. Just don’t ask the Texas A&M Real estate Center what is driving the Texas housing market. The economists at the A&M RECenter are apparently in bed with the Fed.