WASHINGTON, Sept 19 (Askume) – U.S. sales of existing homes fell more than expected in August, as supply continued to improve but home prices remained high.
The National Association of Realtors reported Thursday that home sales fell 2.5% last month to a seasonally adjusted annual volume of 3.86 million units.
Economists surveyed by Askume had predicted home resales would fall to 3.9 million units.
Home resales, which make up a big chunk of U.S. home sales, fell 4.2% year over year in August. The median price of an existing home rose 3.1% from a year ago to $416,700, the highest level on record in August.
House prices rose in all four regions.
The Federal Reserve cut interest rates by 50 basis points on Wednesday, lowering borrowing costs for the first time since 2020. The move could further drive down mortgage rates, which have already hit a 1-1/2-year low.
Lower mortgage rates may encourage more homeowners to put their homes on the market, which will increase supply.
Most homeowners have mortgage rates below 4%, and the so-called “rate lock” has reduced supply in the secondary housing market. However, demand may exceed supply due to the low cost of borrowing, keeping home prices high.
Fed Chairman Powell told reporters on Wednesday, “The real problem with housing is that we don’t have enough housing, and that will remain the case.” He added, “The Fed doesn’t really care about it. We normalize interest rates, you’ll see the real estate market normalize as well.”
Housing inventory rose 0.7% to 1.35 million units last month. Supply increased by 22.7% compared to the same period last year.
“Home sales disappointed again in August, but recent low mortgage rates and rising inventory should provide an environment for sales growth in the coming months,” said Lawrence Yun, NAR chief economist.
At August’s sales pace, it will take 4.2 months to clear the inventory of existing homes, compared with 3.3 months a year ago. A four- to seven-month supply is considered a healthy balance between supply and demand.
Properties typically spent 26 days on the market in August, compared to 20 days a year ago. First-time homebuyers accounted for 26% of sales, which is on par with the lowest sales volume in November 2021 and compared to 29% a year ago.
That’s below the 40% that economists and real estate agents believe is needed for a strong housing market.
All-cash sales accounted for 26% of transaction volume, down from 27% a year ago. Distressed sales, including foreclosures, were just 1% of transaction volume, about the same as last year.
