The National Association of Realtors said on Monday U.S. existing home sales fell more than expected in August, falling 4.8% to an annual rate of 5.31 million units. Economists polled by Reuters had forecast a 5.51 million-unit pace of home sales last month, and sales for the month prior were up 6.2% on a year-over-year basis.
“Sales activity was down in many parts of the country last month — especially in the South and West — as the persistent summer theme of tight inventory levels likely deterred some buyers,” said Lawrence Yun, the NAR’s chief economist. “The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year.”
Existing home sales fell the steepest in the South and West, both regions which have seen the fastest price gains in recent months. Nationwide, the median home price fell just slightly in August to $228,700, which is still up 4.7% from the prior year. However, on a year-over-year basis the rate is at its lowest since August 2014. Prices in the West were up 7.1% from a year earlier.
“With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors,” adds Yun.
July’s sales pace was revised slightly lower to 5.58 million units. Meanwhile, single–family home sales declined 5.3% to a seasonally adjusted annual rate of 4.69 million in August from 4.95 million in July, but are still 6.1 percent above the 4.42 million pace a year ago. Existing condominium and co–op sales fell 1.6% to a seasonally adjusted annual rate of 620,000 units, down from 630,000 units in July. The median existing condo price was $217,400 in August, which is 2.2% higher than a year ago.
“When the Federal Reserve decides to lift short–term rates — likely later this year — the impact on mortgage rates and overall housing demand will likely not be pronounced,” says Yun. “With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates — especially if today’s stronger labor market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets.”
Existing Home Sales Regional Breakdown
August existing–home sales in the Northeast were at an annual rate of 700,000, unchanged from July and 6.1 percent above a year ago. The median price in the Northeast was $271,600, which is 2.4 percent above August 2014.
In the Midwest, existing–home sales declined 1.5 percent to an annual rate of 1.28 million in August, but remain 5.8 percent above August 2014. The median price in the Midwest was $181,100, up 4.0 percent from a year ago.
Existing–home sales in the South fell 6.6 percent to an annual rate of 2.14 million in August, but are still 5.9 percent above August 2014. The median price in the South was $196,300, up 6.0 percent from a year ago.
Existing–home sales in the West dropped 7.8 percent to an annual rate of 1.19 million in August, but remain 7.2 percent above a year ago. The median price in the West was $321,300, which is 7.1 percent above August 2014.