In some more lukewarm news about the economy today, existing home sales increased 7.6% in August to an annualized rate of 4.1 million, according to the National Association of Realtors. That might sound good, particularly after July's dramatic 27% decline. But excluding July, existing sales were still the lowest since at least 1999.
To be sure, sales were a lot better than they were in July. They remain 19% lower than August 2009, however. Here's a chart that provides some historical perspective:
You can see that the most recent bar above is still the second smallest shown. If home sales are stabilizing at this very low rate, then they will have trouble keeping up with the housing inventory going forward. Foreclosures are still occurring in very high numbers, which banks reportedly working hard to delay to keep weak sales from bringing down prices further.
In fact, existing home inventory also declined slightly in August, by 0.6%. That's not great, but it's certainly better than July's 3.1% increase. Here's the inventory chart:
You can see that it remains quite high. That's part of the reason that home prices have declined for two straight months. The median national home price fell by 0.5% in July and another 1.9% in August to $178,600. That's virtually flat to where NAR said prices were a year earlier at $177,200.
The residential real estate is in a state of limbo at this time. The home buyer credit distorted the market, and now it begin to stabilize at whatever sales rate better reflects actual demand going forward. Since it's just a few months since the credit's influence is gone, it's hard to say if we're there yet. But for now, the August sales numbers continue to suggest that home buyer demand is quite weak.