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While existing-home sales have seen solid gains in 2015, reaching levels not seen since before the crisis seven years ago, the rate of increase may be slowing down, according to data released by Auction.com on Tuesday.
Auction.com's August 2015 Real Estate Nowcast predicted that seasonally adjusted existing-home sales for August will fall between the rates of 5.46 and 5.86 million annual sales, with a targeted number of 5.64 million. Though that would be a 12.9 percent year-over year hike from August 2014 – the largest year-over-year gain for existing-home sales in two years – it would be an increase of only 1 percent from July.
“We may be looking at the beginning of a shift in existing home sales activity,” Auction.com EVP Rick Sharga said. “The volume of sales, while continuing to increase, appears to be slowing down. And home prices, which have consistently appreciated over the past few years, may finally be leveling off.”
“We may be looking at the beginning of a shift in existing-home sales activity.”
The National Association of Realtors (NAR) existing-home sales data for July released on August 20 indicated that existing homes were selling at an annual rate of 5.59 million units, which was a 10.3 percent increase year-over-year and was right in line with the Nowcast prediction for July, which was 5.57 million. The first-time buyer share was at its lowest point since January, however, due to low inventory and rising prices.
“Limited inventory of homes for sale – especially entry level homes for first-time home buyers – will make it hard for the market to reach higher numbers in 2015,” Sharga said. “This is true for both existing home sales and new home sales, where inventory is improving, but still near a 40-year low.”
Auction.com's Nowcast suggests that the median existing-home price for August will fall between $219,132 and $242,199 with a targeted price of $230,666. That number represents a year-over-year increase of 5.6 percent but a month-over-month decline of 1.4 percent. NAR reported that the median existing-home price rose by 5.6 percent year-over-year in July up to $234,000, which was only 5.1 percent lower than their peak and 36 percent higher than the trough. July's median existing-home sales price of $234,000 was in line with the Nowcast predicted range of between $227,170 and $251,082 for the month.
The Auction.com Real Estate Nowcast predicts markets trends as they are occurring weeks ahead of the findings of other benchmark studies by combining industry data, proprietary company transactional data, and Google search activity.
