Existing Home Sales Will Continue To Surge In July; Pricing Moves From Recovery To Expansion Mode, According To Auction.com Real Estate Nowcast

Auction.com Model Projects July Existing Home Sales to Come in at 5.67 Million Units (SAAR), and Median Sales Price at $239,126

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Auction.com, LLC

Jul 22, 2015, 05:22 ET

IRVINE, Calif. and SILICON VALLEY, Calif., July 22, 2015 /PRNewswire/ -- Auction.com, LLC, the nation's leading online real estate marketplace, has released its July Auction.com Real Estate Nowcast which projects that existing home sales for the month of July will fall between seasonally adjusted annual rates of 5.49 and 5.84 million annual sales, with a targeted number of 5.67 million – up 3.2 percent from June and 11.7 percent from a year ago.

"May and June existing home sales have both been very encouraging for anyone looking for proof that the housing market is in recovery, and our July nowcast indicates that this positive momentum will continue into July," said Auction.com Executive Vice President Rick Sharga. "One potential area of concern is the steeper-than expected increase in home prices. While this is driven by limited inventory, and a declining number of distressed home sales, affordability may start to become an issue if home price increases continue to outpace wage growth. And if the Fed does move to raise interest rates as expected this fall, we could see home sales volume begin to weaken."

Earlier today, the National Association of Realtors® (NAR®) released its existing home sales data for June, reporting that home sales were at 5.49 million units – a 3.2 percent increase from May's sales and the highest level in eight years. The sharp increase was in line with Auction.com's June nowcast point estimate of 5.55 million (revised downward from 5.57 million) – a prediction that beat the consensus estimate, whose high end range of 5.45 million was below the actual level of sales. The NAR also revised downward its May report to 5.32 million from its original estimate of 5.35, nearly matching Auction.com's nowcast estimate of 5.31 for that month.

NAR also reported a June increase in existing home prices to $236,400 – a 6.5 percent leap from one year ago and besting the previous all-time high of $230,400 set in July 2006, meaning that from a price perspective, the housing recovery has shifted to an expansion. This number was well within the range of $217,482 and $240,375 that Auction.com predicted last month. Findings from the Auction.com Real Estate Nowcast suggest that sales prices for existing homes will fall between $227,170 and $251,082 in the month of July, with a targeted price of $239,126. This represents a 4.6 month-over-month and a 7.7 percent year-over-year increase for the month, and would set another record for median home prices.

While the first time homebuyer percentage slipped slightly to 30 percent from 32 percent in June according to the NAR data, it remains higher than earlier in the recovery. "First time homebuyers will continue to be challenged in an environment with limited entry level inventory, tight credit and rapidly-rising prices," Sharga noted. Additionally, all-cash sales, the best indicator of true investor purchases, continued to drop, falling to 22 percent in June, from 24 percent in the previous month and 32 percent the year before.

"This is not surprising given the big increases in prices that are making return hurdles harder and harder to meet," said Auction.com Chief Economist Peter Muoio. "This is the lowest level of all-cash sales since December 2009. Similarly, distressed sales accounted for just 8 percent in June, matching an August 2014 low. Taken together these indicators signify a housing recovery on more solid ground, with fickle investors playing a smaller role, the vast majority of sales non-distressed, prices back to pre-bust levels and sales increasing sharply."

About the Auction.com Real Estate Nowcast Model

The Auction.com Real Estate Nowcast combines industry data, proprietary company transactional data and Google search activity to predict market trends as they are occurring – weeks before the findings of other benchmark studies are released. Building upon the groundbreaking work by Google Chief Economist Hal Varian, Auction.com's nowcast model extends a traditional autoregressive-forecasting model to incorporate contemporaneous information that provides significantly enhanced accuracy.

Auction.com will occasionally update its nowcast as fresh data provides additional signals for current home sales activity. The Auction.com Real Estate Nowcast model has proven highly accurate over the course of 2014 and into 2015.

Existing Home Sales

Month	Reported Existing Home Sales (in millions)	Auction.com Point Estimate (SAR in millions)	Auction.com Predicted Range (SAR in millions)
June 2014	5.01	5.05	4.94 – 5.17
July 2014	5.07	5.11	4.99 – 5.22
August 2014	5.00	5.19	5.09 – 5.30
September 2014	5.10	5.08	4.91 – 5.24
October 2014	5.16	5.13	4.96 – 5.30
November 2014	4.95	5.16	4.99 – 5.33
December 2014	5.07	5.03	4.85 – 5.21
January 2015	4.82	5.01	4.83 – 5.19
February 2015	4.89	5.03	4.87 – 5.19
March 2015	5.21	5.06	4.90 - 5.22
April 2015	5.09	5.33	5.16 – 5.50
May 2015	5.32	5.31	5.14 – 5.48
June 2015	5.49	5.55	5.37 – 5.73
July 2015	TBD	5.67	5.49 – 5.84

Sources: Google, NAR, Auction.com

Existing Home Sales Pricing

Month	Reported Existing Home Price	YoY % Change	Auction.com Point Estimate	YoY % Change	Auction.com Predicted Range
June 2014	$222,000	3.7%	$211,753	-1.0%	$201,166 - $222,341
July 2014	$221,600	4.3%	$219,381	3.3%	$208,412 - $230,350
August 2014	$218,400	4.1%	$219,148	4.5%	$208,190 - $230,105
September 2014	$209,100	5.3%	$214,433	8%	$203,712 - $225,155
October 2014	$207,500	5.1%	$205,922	4.3%	$195,626 - $216,218
November 2014	$207,200	6%	$204,204	4.5%	$193,993 - $214,414
December 2014	$208,200	5.3%	$205,783	4.1%	$195,493 - $216,072
January 2015	$197,600	5.2%	$205,126	9.2%	$194,869 - $215,382
February 2015	$201,900	7.2%	$201,077	6.7%	$191,023 - $211,131
March 2015	$210,700	7.1%	$204,165	3.8%	$193,956 - $214,373
April 2015	$219,400	8.9%	$211,633	5%	$201,052 - $222,215
May 2015	$228,700	7.9%	$220,799	4.2%	$209,759 - $231,839
June 2015	$236,400	6.5%	$228,929	3.1%	$222,098 - $245,477
July 2015	TBD	TBD	$239,126	7.7%	$227,170 - $251,082

Sources: Google, NAR, Auction.com

About Auction.com:
Auction.com, LLC, is the nation's leading online real estate marketplace. Founded in 2007, the company has sold over $30 billion in residential and commercial real estate assets. Auction.com has over 900 employees and headquarters in Irvine and Silicon Valley, California as well as offices in Austin and Plano, Texas, Atlanta, Denver, New York and Miami. Visit www.auction.com for more information.

SOURCE Auction.com, LLC