August Existing Home Sales Down 2%

Existing home sales fell in August, the first decline in three months, the National Association of Realtors reported Wednesday.

Total existing home sales ( fell by 2% from July to a seasonally adjusted annual rate of 5.88 million. Year-over-year, sales dropped by 1.5% from a year ago (5.97 million).

Single-family home sales decilned to a seasonally adjusted annual rate of 5.19 million in August, down 1.9% from 5.29 million in July and down 2.8% from one year ago. The median existing single-family home price jumped to $363,800 in August, up 15.6% a year ago. Existing condominium and co-op sales fell to a seasonally adjusted annual rate of 690,000 units in August, down 2.8% from 710,000 in July but up 9.5% from one year ago. The median existing condo price rose to $302,800 in August, an annual increase of 10.8%.

All four regions saw monthly and annual declines. Sales in the Northeast fell by 1.4% in August to an annual rate of 730,000 and fell by 2.7 from a year ago. The median price in the Northeast jumped to $407,800, up 16.8% from one year ago. Sales in the Midwest fell by 1.4% to an annual rate of 1,370,000 in August and by 2.1% decline from a year ago. The median price in the Midwest rose by $272,200, a 10.5% jump from a year ago.

Sales in the South fell by 3% in August to an annual rate of 2,550,000 and fell by 0.8% from a year ago. The median price in the South rose to $303,200, a 12.8% from a year ago. Sales in the West decreased by 0.8% to an annual rate of 1,230,000 in August and fell b 1.6% from one year ago. The median price in the West rose to $507,900, up 11.4% from a year ago.

“Notably, the first-time homebuyer share declined again to 29%, highlighting the inventory shortages and fast-rising home prices that continue to challenge prospective buyers,” said Mike Fratantoni, MBA Chief Economist. “The inventory of existing homes on the market remains more than 13% below last year’s levels. Fortunately, new inventory is on the way. There are more than 700,000 homes under construction.”

“Sales of existing homes declined in line with expectations during August,” said Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “Sales continued to be constrained by extraordinary low for-sale inventory and high prices. Survey data from Fannie Mae and the major consumer confidence surveys show that potential buyers currently believe now is not a great time to buy a home, while seller optimism is near an all-time high. We expect the housing market to gradually move back into balance over the next year, as higher prices bring out more sellers and new home construction gradually ramps up.”

“You can’t buy what’s not for sale,” said Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif. “Buyers are eager and ready, especially as near-record low mortgage rates persist and income is on the rise. Yet, inventory remains low and nominal house-price growth is outpacing the gains in house-buying power.”

“Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory,” said Lawrence Yun, NAR chief economist. “

The report said total housing inventory at the end of August totaled 1.29 million units, down 1.5% from July’s supply and down 13.4% from one year ago (1.49 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from July but down from 3.0 months a year ago. The median existing-home price for all housing types in August rose to $356,700, up 14.9% from August 2020 ($310,400), as prices increased in each region. This marks 114 straight months of year-over-year gains.

Other report findings:

–Properties typically remained on the market for 17 days in August, unchanged from July and down from 22 days a year ago. Eighty-seven percent of homes sold in August 2021 were on the market for less than a month.

–First-time buyers accounted for 29% of sales in August, down from 30% in July and 33% a year ago.

–Individual investors or second-home buyers purchased 15% of homes in August, even with July but up from 14% a year ago. All-cash sales accounted for 22% of transactions in August, down from 23% in July and up from 18% a year ago.

–Distressed sales represented less than 1% of sales in August, equal to July and a year ago.