Existing home sales fell a greater than expected 3.2% in July, to a seasonally adjusted annualized rate of 5.39 million. Sales were well below the Econoday consensus estimate of 5.52 million, and lower than the lowest guess in a range of 5.420 to 5.650 million. The median sale price declined as well. As is typically the case, the Econoday writer manages to spin the news as positive.

Highlights

Prices are coming down but sales aren’t going up, at least not in July. Sales of existing homes slowed to a 5.39 million annualized rate which is under low-end expectations and down 3.2 percent on the month. The year-on-year rate has been slowing and is suddenly under water at minus 1.6 percent.

The median price fell 1.4 percent to $244,100 with the year-on-year rate a little less respectable at plus 5.3 percent, a rate roughly consistent with this morning’s FHFA house price report where slowing is also the theme.

Single-family sales are not a plus in today’s report but they are compared to condo sales. Single-family home sales fell 2.0 percent to a 4.82 million rate with condo sales down a very sharp 12.3 percent to a 570,000 rate. Year-on-year, single-family home sales are in the negative column but not by much, at minus 0.8 percent vs an 8.1 percent decline for condos.

Weakness in sales is a plus at least for supply which is still very thin and a key factor holding down sales. Supply on the market rose to 2.13 million from 2.11 million in June with supply relative to sales at 4.7 months vs June’s 4.5 months.

Pending home sales have been weak which limits the surprise of today’s report. Yet today’s report does take some shine off yesterday’s sales surge for new homes. Still, lower prices together with higher supply are pluses for existing home sales ahead.

Allegedly, weaker sales is a plus for supply, and a plus in supply will lead to strength in sales.

Wow.

Despite the fact that pending home sales have been very weak, no economist expected this decline.

Mike “Mish” Shedlock