Potential existing-home sales increased to a 6.40 million seasonally adjusted annualized rate (SAAR), a 0.05% month-over-month increase in August 2021, according to First American’s proprietary Potential Home Sales Model for the month of August 2021.
This represents an 83.5% increase from the market potential low point reached in February 1993. The market potential for existing-home sales increased 9.9% compared with a year ago, a gain of 575,700 (SAAR) sales. Currently, potential existing-home sales is 392,200 (SAAR), or 5.8% below the pre-recession peak of market potential, which occurred in April 2006.
The market for existing-home sales outperformed its potential by 6.4% or an estimated 407,600 (SAAR) sales. The market performance gap increased by an estimated 92,500 (SAAR) sales between July 2021 and August 2021.
“This past year has shown us that the economy follows the path of COVID-19, and that was evident in August’s labor market data. The labor market recovery stalled, as the resurgent pandemic discouraged workers from re-entering the labor force,” said Fleming. “Additionally, consumer confidence fell to a six-month low as worries about rising COVID-19 infection rates weighed on consumers’ outlook for the economy. But is increased economic uncertainty bad news for housing market potential? Not necessarily.”
In August, First American data showed house-buying power increased by 0.9% compared with July due to a 0.03% point decrease in the 30-year, fixed mortgage rate and a 0.5% increase in median household income.
Additionally, the decline in mortgage rates contributed to a $1,700 increase in house-buying power in August.
The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report coming out soon.