August Existing Home Sales Dip

Existing home sales fell nearly five percent in August, the National Association of Realtors reported yesterday.

Sales of existing houses fell to 5.31 million last month from a downwardly revised total of 5.58 million in July. None of the four major regions experienced sales increases in August, NAR said.

“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 NAR Chief Economist Lawrence Yun.

Yun added that price appreciation has started to moderate from the “unhealthier” rate of growth seen earlier in the year.

“I’ve been expecting that the seasonally adjusted pace for existing home sales would slow due to limited inventory and higher prices,” Calculated Risk Economist Bill McBride said. “Maybe this is the beginning of that slowdown.”

But McBride noted that new home sales are more important for the economy than existing home sales. “So some slowing for existing home sales (if it continues) would not be a big deal for the economy,” he said.

The median existing-home price for all housing types in August equaled $228,700, or 4.7 percent above year-ago levels. August’s price increase marked the forty-second consecutive month of year-over-year gains, NAR said.

“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,” Yun said.

Lynn Fisher, vice president of research and economics with the Mortgage Bankers Association, said she expects that rates will trend upward over the medium term and will likely end 2015 closer to 4.3 percent.

NAR said properties typically stayed on the market for 47 days in August, an increase from 42 days in July but below the 53 days seen in August 2014. Short sales remained on the market the longest in August, a median of 124 days, while foreclosures sold in 66 days and non-distressed homes took 45 days. Forty percent of homes sold in August were on the market for less than a month.

All-cash sales decreased slightly to 22 percent of transactions in August from 23 percent in July and 23 percent a year ago. Individual investors, who account for many cash sales, purchased 12 percent of homes in August, down from 13 percent in July and unchanged from a year ago. Sixty percent of investors paid cash in August, NAR reported.