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U.S. existing home sales declined slightly in August, falling by 0.2% to a seasonally adjusted annual rate of 4.00 million units, though sales were up 1.8% year over year. Affordability pressures remain due to high home prices and mortgage rates, even after recent rate reductions. The median home price increased to USD?422,600, marking the 26th straight year of annual price growth, and homes are roughly 52% more expensive than pre-pandemic levels. Inventory decreased modestly but remains steady at 4.6 months of supply. Regional performance was mixed, with the Midwest benefiting from relatively better affordability.
Sales of previously owned homes in the U.S. edged lower in August as many buyers continue to face affordability challenges. Home prices remain high and mortgage rates, although recently eased, are still significant enough to affect purchasing decisions. According to the National Association of Realtors (NAR), sales fell by 0.2% from July, decreasing from a seasonally adjusted annual rate of 4.01 million units to 4.00 million. Economists had projected a slightly larger drop to 3.96 million units. Despite this monthly decline, sales were up 1.8% compared with the same period last year. Advertisement
Lawrence Yun, NAR?s chief economist, explained that sales have been sluggish in recent years due to high mortgage rates and limited inventory. He added that the recent decline in mortgage rates, along with an increase in available homes, should support higher sales in the upcoming months. Over the past two years, monthly sales have averaged around 4 million units, a pace weaker than during the 2007?2009 housing downturn.
Mortgage rates for a 30?year fixed loan recently dropped to 6.26%, the lowest since last fall, according to Freddie Mac. While this offers some relief, rates remain well above the levels seen immediately after the COVID?19 pandemic. The Federal Reserve cut interest rates recently for the first time since December, and markets anticipate further reductions later this year, which could bring additional relief for mortgage borrowers.
Regional trends in August were uneven. Sales increased in the Midwest and West but declined in the Northeast and South. Yun highlighted that the Midwest has recently performed better than other regions, mainly due to more affordable housing options.
The median sales price rose 2.0% from a year earlier, reaching USD?422,600. This marks the 26th consecutive year of year-over-year price increases. Homes are now approximately 52% more expensive than in August 2019, just before the pandemic-driven price surge began. Total inventory decreased slightly by 1.3% to 1.53 million units, which would provide about 4.6 months of supply at the current sales pace, the same as in July.
All-cash purchases accounted for 28% of transactions, down from 31% in the previous month. Investors were responsible for 21% of sales, slightly up from 20% a month earlier. First-time buyers represented 28% of total sales, unchanged from July but higher than last year?s 26%.
Source Reuters
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