August Existing Home Sales Lose Momentum

Existing home sales fell for the second straight month, despite near record-low interest rates, as low inventories kept would-be buyers at bay, the National Association of Realtors reported yesterday.

NAR said existing home sales fell by 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August from a downwardly revised 5.38 million in July. After last month’s decline, sales are at their second-lowest pace of 2016, but are still slightly higher (0.8 percent) than a year ago (5.29 million).

Single-family home sales declined by 2.3 percent to 4.70 million in August from 4.81 million in July and fell by 0.6 percent above the 4.67 million pace a year ago. The median existing single-family home price was $242,200 in August, up 5.3 percent from August 2015. Existing condominium and co-op sales improved by 10.5 percent to 630,000 units in August from 570,000 in July and rose by 1.6 percent from a year ago (620,000 units). The median existing condo price was $225,100 in August, 3.7 percent higher than a year ago.

Regionally, existing home sales fell everywhere except for the Northeast, which saw an improvement of 6.1 percent in August to 700,000 units, and remained unchanged from a year ago. The median price in the Northeast was $274,100, which is 0.8 percent above August 2015.

In the Midwest, sales decreased by 0.8 percent to 1.27 million in August, but improved by 0.8 percent from a year ago. The median price in the Midwest was $190,700, up 5.5 percent from a year ago. Sales in the South in August fell by 2.7 percent to 2.16 million, but were 0.9 percent higher than a year ago. The median price in the South was $209,700, up 6.7 percent from a year ago. Sales in the West fell by 1.6 percent to 1.20 million in August, but were 0.8 percent higher than a year ago. The median price in the West rose to $347,400, which is 9.2 percent above August 2015.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the lower-than-expected reading stemmed likely from the low level of inventories and affordability hurdles. “The median price of an existing home climbed 5.1 percent from a year earlier, and total inventory fell to just 2.04 million homes available for sale,” he said.

NAR Chief Economist Lawrence Yun said recent job growth is not yielding higher home sales. “Healthy labor markets in most the country should be creating a sustained demand for home purchases,” he said. “However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”

NAR said the median existing-home price for all housing types in August rose to $240,200, up 5.1 percent from a year ago ($228,500), marking the 54th consecutive month of year-over-year gains.

Total housing inventory at the end of August fell by 3.3 percent to 2.04 million existing homes available for sale, and is now 10.1 percent lower than a year ago (2.27 million) and has declined year-over-year for 15 straight months. Unsold inventory is at a 4.6-month supply at the current sales pace, down from 4.7 months in July.

The report said the share of first-time buyers was 31 percent in August, which is down from 32 percent both in July and a year ago. First-time buyers represented 30 percent of sales in all of 2015. Properties typically stayed on the market for 36 days in August, unchanged from July and down considerably from a year ago (47 days). Short sales were on the market the longest at a median of 144 days in August, while foreclosures sold in 42 days and non-distressed homes took 35 days. Forty-six percent of homes sold in August were on the market for less than a month.

The report said all-cash sales represented 22 percent of transactions in August, up from 21 percent in July and unchanged from a year ago. Individual investors purchased 13 percent of homes in August, up from 11 percent in July and 12 percent a year ago. Sixty-two percent of investors paid in cash in August.

Distressed sales represented 5 percent of sales in August, unchanged from last month and down from 7 percent a year ago. Four percent of August sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 12 percent below market value in August (18 percent in July), while short sales were discounted 14 percent (16 percent in July).