August Existing Home Sales Flat

For the first time in five months, existing home sales didn’t fall. But they didn’t rise, either.

The National Association of Realtors yesterday reported August existing home sales remained unchanged at a seasonally adjusted annual rate of 5.34 million. From a year ago, sales fell by 1.5 percent.

Single-family home sales held steady at a seasonally adjusted annual rate of 4.75 million in August from July and fell by 1.0 percent below the 4.8 million sales pace a year ago. The median existing single-family home price was $267,300 in August, up 4.9 percent from a year ago. Existing condominium and co-op sales also held steady at 590,000 units in August from July and fell by 4.8 percent from a year ago. The median existing condo price was $244,500 in August, up 2.0 percent from a year ago.

Gains in the Northeast and Midwest offset downturns in the South and West. Sales in the Northeast increased by 7.6 percent to an annual rate of 710,000, but were 2.7 percent below a year ago. The median price in the Northeast rose to $292,800, up 2.6 percent from a year ago. In the Midwest, sales rose 2.4 percent to 1.28 million in August, but fell by 0.8 percent from a year ago. The median price in the Midwest rose to $208,500, up 3.4 percent from last year.

Sales in the South decreased by 0.4 percent to 2.23 million in August, but up from 2.19 million a year ago. The median price in the South rose to $227,900, up 3.2 percent from a year ago. Sales in the West dropped by 5.9 percent to 1.12 million in August and by 7.4 percent below a year ago. The median price in the West rose to $392,900, up 4.8 percent from August 2017.

“Housing continues to lag behind the general pickup in economic activity,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “While employment and income growth have strengthened over the past year, sales of both new and existing homes have lagged, and home building continues to have a hard time gaining traction.”

Vitner said existing home sales have been “particularly disappointing,” as many homeowners remain reluctant to put their homes up for sale due to fears that they will have a hard time finding a suitable home to buy. “The lack of turnover in the housing market at a time when the economy is growing strongly is without precedent and has contributed to the sustained run-up in home prices, as homes in desirable locations are tending to draw multiple bids and sell very quickly.”

However, NAR Chief Economist Lawrence Yun said the decline in existing home sales appears to have hit a plateau with robust regional sales. “With inventory stabilizing and modestly rising, buyers appear ready to step back into the market,” he said.

The report said the median existing home price for all housing types in August rose to $264,800, up 4.6 percent from a year ago ($253,100), marking the 78th straight month of year-over-year gains.

NAR said total housing inventory at the end of August also remained unchanged from July at 1.92 million existing homes available for sale, up from 1.87 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace, consistent from last month and up from 4.1 months a year ago.

The report said properties typically stayed on the market for 29 days in August, up from 27 days in July but down from 30 days a year ago. Fifty-two percent of homes sold in August were on the market for less than a month.

“While inventory continues to show modest year over year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” Yun said. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory–especially moderately priced, entry-level homes–would propel sales.”

“There is a debate as to whether the sluggish pace of home sales is principally due to supply or demand influences. The answer is both,” Vitner said. “The supply of affordable homes remains exceptionally lean but demand is clearly there…The problem is too few homes priced below the median and flagging demand for higher prices homes.”

NAR said first-time buyers represented 31 percent of sales in August, down from last month (32 percent) but the same as a year ago. All-cash sales represented 20 percent of transactions in August, unchanged from July and a year ago. Individual investors purchased 13 percent of homes in August, unchanged from July and down from 15 percent a year ago.

The report said distressed sales5 represented 3 percent of sales in August (lowest since NAR began tracking in October 2008), unchanged from last month and down from 4 percent a year ago. Two percent of June sales were foreclosures; 1 percent were short sales.