Existing-home sales softened in August, according to the latest monthly report from the National Association of Realtors (NAR).
The decrease marks the second consecutive month of sagging sales despite near-record-low interest rates. The culprits? Higher market prices and not enough homes to choose from, said Lawrence Yun, NAR’s chief economist.
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“Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines,” Yun said in the report.
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Transactions involving co-ops, condominiums, single-family homes and townhouses dropped .9 percent for the month, putting the rate at 5.33 million in total sales, down from 5.38 million in July. The July rate was revised from a previously reported 5.39 million. In August of 2015, total sales stood at 5.29 million.
While the year-over-year numbers are good, the month-over-month numbers offset them; August sales are the second-lowest of 2016. On a more-positive note, the existing-home-sales median price for all four housing types rose 5.1 percent to $240,200, compared with $228,500 in August of 2015 – the 54th straight month of annual gains.
The NAR also reported that inventory fell 3.3 percent in August, with 2.04 million residential properties for sale, and that the market now is 10.1-percent lower than last August when it had 2.27 million residential properties for sale. That translates into a housing supply of 4.6 months, down from July’s 4.7 months.
“It’s very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago,” Yun said. “While recent data from the U.S. Census Bureau shows that household incomes rose strongly last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale. Without more supply, the U.S. homeownership rate will remain near 50-year lows.”
Some statistics to note from the NAR:
- First-time homebuyers amounted to 31 percent of those making purchases in August, a decrease from both last month and last year, when first-time homebuyers amounted to 32 percent.
- Cash sales came in as 22 percent of the total transactions that took place in August, an increase from last month (21 percent) and an unchanged rate from last year.
- In the Northeast Region, existing-home sales increased to 700,000, and the median price increased to $274,100 from last year.
- In the Midwest Region, existing-home sales decreased to 1.27 million, and the median price increased to $190,700 from last year. In the South Region, existing-home sales decreased to 2.16 million, and the median price increased to $209,700 from last year.
- In the West Region, existing-home sales decreased to 1.20 million, and the median price increased to $347,400 from last year.
Headquartered in Chicago, the NAR represents the “voice of real estate” and an estimated 1.1 million members involved in all aspects of the industry.