Existing-home sales rose in August following a big correction in July, according to the National Association of Realtors (NAR), which reported a 7.6% increase to a seasonally adjusted annual rate of 4.13 million last month from an upwardly revised 3.84 million in July.
While the numbers showed improvement in August, existing-home sales still remain subpar, Lawrence Yun, NAR chief economist, said in a statement. Existing-home sales are completed transactions that include single-family, townhomes, condominiums, and co-ops.
"The housing market is trying to recover on its own power without the federal home buyer tax credit stimulus," Yun said. "Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual because of lingering economic uncertainty."
Last month's numbers remain 19.0% below the 5.10 million-unit pace in August 2009. According to Freddie Mac, the national average commitment rate for a 30-year, fixed-rate mortgage fell to a record low 4.43% in August from 4.56% in July. The rate was 5.19% in August 2009. The national median existing-home price for all housing types was $178,600 in August, up 0.8% from a year ago. Distressed homes rose to 34% of sales in August from 32% in July; they were 31% in August 2009.
Economists' consensus was for a 4.05 million increase in existing-home sales.
"Existing home sales equals closings, meaning the August number reflects some mix of contract sales that occurred in June, July, and August. We know that sales in those months were somewhat depressed by the pull of sales into April, because of the tax credit. The August uptick reflects the waning influence of the April effect," said Steve Blitz, senior economist with New York-based Majestic Research.
Blitz said he now assumes that sales will trend back toward the 4.5 million mark over the next several months, which is consistent with a 2% growth economy and a 9.5% unemployment rate.
"To be certain, sales at 4 or 5 million is a depressed level, and that remains problematic given the continued pressure of inventory coming into the market by households needing to get out from under," he said. "Home prices will fall further to keep even this low level of demand in place."
Weak demand in the real estate market also was reflected Thursday by the Mortgage Bankers Association's (MBA) analysis of the Federal Reserve Board Flow of Funds data. The MBA found that commercial and multifamily mortgage debt outstanding decreased in the second quarter, to $3.24 trillion, down $52 billion, or 1.6%, from first-quarter 2010. Declines were driven by drops in mortgages held in commercial mortgage-backed securities and loans held by banks and thrifts.
"Demand for commercial and multifamily mortgages, while increasing, remained weak in the second quarter and contributed to the continuing trend of loans paying down and paying off faster than new ones replace them," said Jamie Woodwell, MBA's vice president of commercial real estate research, in a statement.
In other economic news, the Conference Board's August leading economic index (LEI) for the United States showed a 0.3% increase to 110.2 following a 0.1% increase in July and a 0.2% decline in June.
The August LEI results indicated that the slow economic recovery will continue, according to Ken Goldstein, economist at the Conference Board.
"While the recession officially ended in June 2009, the recent pace of growth has been disappointingly slow, fueling concern that the economic recovery could fade and the U.S. could slide back into recession," Goldstein said in a statement. "However, latest data from the U.S. LEI suggest little change in economic conditions over the next few months. Expect more of the same--a weak economy with little forward momentum through 2010 and early 2011."
Read about July's existing-home sales in AdvisorOne.com.