According to the National Association of Realtors, used home sales fell 2.5 percent in August from July, to a seasonally adjusted annual rate of 3.86 million units.
That's slightly lower than analysts expected. Sales were 4.2% lower than in August 2023. On an annual basis, that's three months in a row of fewer than 4 million sales.
That figure is based on closings — contracts that were likely signed in late June and July, when mortgage rates were beginning to fall but were not yet as low as they are today. The average rate on the popular 30-year fixed loan was just over 7% in mid-June, then steadily fell to 6.7% by the end of July, according to Mortgage News Daily.
“Home sales were disappointing again in August, but the recent trend of lower mortgage rates coupled with rising inventory is a powerful combination that will set the stage for increased sales in the coming months,” said Lawrence Yun, NAR chief economist. “The home buying process, from the initial search to receiving the keys to the house, typically takes several months.”
A “For Sale” sign announces a home for sale on April 20, 2023 in Cutler Bay, Florida.
Joe Raedle |
The inventory of homes for sale is improving slightly. At the end of August, there were 1.35 million units for sale, up 0.7% from July and 22.7% from a year ago. However, it is still only 4.2 months' supply. A 6-month supply is considered balanced between buyers and sellers.
“The increase in inventory – and more specifically, the associated multiple months' supply – means that homebuyers now have a much better chance of finding the right home at more affordable prices,” Yun added. “However, in areas where supply remains limited, such as many markets in the Northeast, sellers still seem to have the upper hand.”
The tight supply is causing continued price pressure. The median price for an existing home sold in August was $416,700, 3.1% more than the same month in 2023. This is the highest price ever for an August.
However, since this is a median, some of this increase is due to sales in August. Sales rose significantly for homes priced above $750,000, but fell for anything under $500,000.
First-time buyers accounted for only 26% of sales in August, hitting the historic low seen in November 2021. Cash sales were 26%, which is slightly below last year but still an all-time high.
Mortgage rates continued to fall in August and September. The rate for a 30-year fixed-rate mortgage is currently at 6.15%, the lowest in about two years.