Existing home sales hold steady in August

Sales of existing homes were flat in August as slower sales in the West and South offset gains in the Northeast and Midwest, according to the National Association of Realtors. Sales were also down on an annual basis for the sixth month in a row.

The seasonally adjusted annual rate for sales of existing single-family homes, condominiums, townhomes, and co-ops stood at 5.34 million. This was unchanged from July and down 1.5 percent from August 2017, when the rate stood at 5.42 million.

Buyers continue to face challenges such as higher prices and mortgage rates. However, housing inventory was finally showing some signs of growth after three straight years of annual declines. There were 1.92 million existing homes for sale in August, unchanged from July but up from 1.87 million properties in August 2017.

"With inventory stabilizing and modestly rising, buyers appear ready to step back into the market," said Lawrence Yun, chief economist at the National Association of Realtors.

The median price for existing homes sold in August was $264,800, a year-over-year increase of 4.6 percent. This marked the 78th straight month of annual price gains.

Single-family home sales had a seasonally adjusted annual rate of 4.75 million in August, unchanged from the previous month but down 1 percent from the previous year. The median sales price for this type of property was $267,300, a 4.9 percent increase from August 2017.

Condominium and co-op sales also showed no change from the previous month, with an annual rate of 590,000 units – a year-over-year drop of 4.8 percent. The median sales price for condominiums and co-ops rose 2 percent from August 2017 to $244,500.

The market remained beneficial for sellers, with the average property staying on the market for 29 days before finding a buyer. This was two days slower than in July but one day faster than in August 2017. Fifty-two percent of existing homes sold in August found a buyer within 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," said Yun. "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."

Rates grew slightly, with Freddie Mac reporting an average commitment rate of 4.55 percent for a 30-year fixed rate conventional mortgage – up from 4.53 percent in July. The average rate for 2017 as a whole was 3.99 percent.

First-time buyers accounted for 31 percent of existing home sales in August, unchanged from a year ago and down slightly from 32 percent in July. The National Association of Realtors' most recent "Profile of Home Buyers and Sellers," released in late 2017, set the annual share of first-time buyers at 34 percent.

"Rising interest rates along with high home prices and lack of inventory continues to push entry level and first-time home buyers out of the market," said Yun. "Realtors continue to report that the demand is there—that current renters want to become homeowners—but there simply are not enough properties available in their price range."

Elizabeth Mendenhall, president of the National Association of Realtors, said many real estate agents report that homeowners are often reticent to list their property. While sellers in many markets are receiving several offers, homeowners worry that they will have trouble finding another home due to higher prices, limited inventory, and competition from other buyers.

"Unfortunately, this fluctuating view is contributing to the short supply of homes," said Mendenhall. "Buyers hoping to find an entry level home in this market should work with a Realtor and be prepared to move quickly as listings sell quickly."

One in five existing homes sold in August was purchased without financing, unchanged from both the previous month and previous year. Individual investors, who account for many of these all-cash sales, bought 13 percent of the existing homes sold in August – down from 15 percent in August 2017 and unchanged from July.

Three percent of the month's sales were distressed properties, matching July's figure of the lowest share since the National Association of Realtors began tracking this information in October 2008. This also marked a drop from 4 percent in August 2017. Two percent of sales in August were foreclosures, while 1 percent were short sales.

The annual existing sales rate in August stood at 710,000 transactions, a jump of 7.6 percent from July. However, this was down 2.7 percent from the previous year. The median sales price in the region was $292,800, an increase of 2.6 percent from August 2017.

The Midwest also saw some gains in existing home sales, with its annual rate rising 2.4 percent from July to 1.28 million. This was still down 0.8 percent from August 2017. The median sales price in the Midwest increased 3.4 percent from the previous year to $208,500.

The South was the only region with a year-over-year gain in the existing sales annual rate, which increased 1.8 percent to 2.23 million despite a 0.4 percent decrease from July. The median sales price in the region was $227,900, a year-over-year increase of 3.2 percent.

In the West, the existing home sales rate fell 5.9 percent from the previous month and 7.4 percent from the previous year to 1.12 million. The median sales price for an existing home in the region was up 4.8 percent to $392,900.

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