Last week housing starts did a happy dance; this week it’s existing home sales.
When July housing starts came in. the U.S. was up 22.6% for the month. Builders were ecstatic. Most economists said Don’t be; it won’t last.
Yesterday July existing home sales were released: 5,860,000 (annualized) was a 24.6% increase from June, an 8.7% increase YoY—and the highest level since Dec. 2006. MarketWatch cited Daren Blomquist, Auction.com’s VP market economics, who warned that “the housing market is on a sugar high” that “will not last.”
Blomquist may be right, if only because the U.S. is running out of inventory to sell. The supply of for-sale existing homes fell from 3.9 months’ worth in June to 3.0 in July. Six months’ supply is normal.
Meanwhile in Canada, July existing home sales rose 26% from June and are up 30.5% YoY according to the Canadian Real Estate Association.
Economists have a well-deserved reputation for not being willing to take yes for an answer; it’s possible that housing will skate through the rest of the year unscathed. It’s probably not a good idea to bet money on it, though.
The best you can say right now is that nobody has a clue what will happen.