Economy Watch: Existing Home Sales Drop in August
- Sep 23, 2014
The National Association of Realtors reported on Monday that U.S. existing home sales decreased 1.8 percent to an annualized rate of 5.05 million units in August, compared with 5.14 million in July. Still, sales are at their second-highest pace of 2014, though 5.3 percent below the 5.33 million annualized rate last August, which was also the second-highest sales level of 2013.
The Realtors posited that part of the reason for the decline was flagging interest from all-cash investors. All-cash sales were 23 percent of transactions in August, according to the organization, dropping for the second consecutive month (the all-cash share was 29 percent in July) and representing the lowest overall share since December 2009, when it was 22 percent. Individual investors, who account for many cash sales, purchased 12 percent of homes in August, down from 16 percent last month and 17 percent in August 2013.
Total housing inventory at the end of August declined 1.7 percent to 2.31 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. Unsold inventory is 4.5 percent higher than a year ago, when there were 2.21 million existing homes available for sale, the NAR noted.
Growth dips in August, Chicago Fed says
Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to –0.21 in August from +0.26 in July, according to the Chicago Fed on Monday. Two of the four broad categories of indicators that make up the index decreased from July, while two of the four categories made negative contributions to the index in August.
The index’s three-month moving average, which is known as CFNAI-MA3, decreased to +0.07 in August from +0.20 in July, marking its sixth consecutive reading above zero. August’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend, but not much. The CFNAI-MA3 also points to limited inflationary pressure over the coming year, according to the central bank.
CFNAI and CFNAI-MA3 are put together from 85 individual economic indicators, and they track the health of the U.S. economy fairly closely. For a short time during the worst of the recession in 2009, CFNAI was almost as low as –4, but in the last four years or so it has hovered around zero, or historic norms of growth.
Wall Street had a down day on Monday, perhaps responding to the housing data, with the Dow Jones Industrial Average off 107.06 points, or 0.62 percent. The S&P 500 declined 0.8 percent and the Nasdaq dropped 1.14 percent.