The number of homes sold in July fell by 9.8 per cent compared to the same month last year, reveal the latest figures from the Notaries, published yesterday. House prices also tumbled, by 10 per cent in year, according to the same figures.

There were 31,973 homes sold in Spain in July, according to sales witnessed by Spanish notaries, a 9.8 per cent fall from last year, or 7.5 per cent fall once adjusted for seasonality. In absolute terms, however, July was the best month for sales this year.

The real driver behind the annualised fall in sales was the 38.4 per cent collapse in new home sales, compared to a fall of just 4.1 per cent in resales. Single-family home sales were down just 1.9 per cent.

Property prices fell 10 per cent to 1,171 €/m2 (-9.6 per cent excluding social housing), resale flats down 10.7 per cent to 1,264 €/m2, and new flats down 2.2 per cent to 1,538 €/m2, whilst single-family home prices fell 7.6% to 964 €/m2.

These figures suggest that the drop in prices might be due to a shift in sales from new build (more expensive) to resales (cheaper). So there might be more to the price decline than meets the eye.

The Notaries put a positive face on the figures. “The fall in annualised terms could turn out to be a one-off exception to the general trend towards stability in the real estate market, as the average for the last three months still indicates an annualised growth of 2.5 per cent compared to last year,” they explain in their press release.

At least the data for mortgage lending was clearly positive with new loans signed up an annualised 17.4 per cent, though the average Spanish mortgage value fell 7.8 per cent to €108,328.

The July plunge in home sales shows how fragile the market still is, with volatile sales and price data making it difficult to interpret one month’s figures with much certainty.

Another big problem is mixed messages, with the latest data from the National Institute of Statistics (INE) showing home sales recorded in July increasing by 10 per cent for five consecutive months of growth, and Spanish house prices increasing for the first time in six years (by 0.8%), all seeming to contradict the latest data from the Notaries.

There is an explanation for the conflicting figures, though not one that reflects very well on the way Spain manages official data. The Notaries’ figures are based on sales they witness each month, making them more timely than sales figures from the INE, which uses data from the Registrars counting sales inscribed in the Property Register several months after sales take place.

With Spanish housing starts collapsing to next to nothing, and the supply of new homes that people might actually want to buy shrinking fast (as opposed to the rubbish built in the boom the banks are trying to sell), what is really going on here? Are new homes sales plunging because demand is shrinking, or because people can’t find what they want?