Sales of existing homes fell 2.5% in August from July to a seasonally adjusted annual rate of 3.86 million units, according to the National Association of Realtors.
This figure is slightly lower than expected by analysts. Sales were 4.2% lower than in August 2023. This is three consecutive months of sales below the 4 million mark, on an annualized basis.
This count is based on closings — contracts that were likely signed in late June and July, when mortgage rates began to decline but were not as low as they are today. The average rate on the popular 30-year fixed loan was just above 7% in mid-June and then fell steadily to 6.7% by the end of July, according to Mortgage News Daily.
“Home sales were disappointing again in August, but the recent decline in mortgage rates coupled with rising inventories is a powerful combination that will set the stage for sales to pick up in the months ahead,” said Lawrence Yun, NAR's chief economist. “The homebuying process, from the initial search to getting the keys to the house, typically takes several months.”
A “For Sale” sign advertises a home for sale on April 20, 2023, in Cutler Bay, Florida.
Joe Raedle | Getty Images
The inventory of homes for sale is improving slightly. At the end of August, there were 1.35 million units for sale, which is up 0.7% from July and 22.7% from a year ago. However, this is still only a 4.2-month supply. A 6-month supply is considered balanced between buyer and seller.
“The increase in inventory — and, more technically, the multi-month supply that accompanies it — means homebuyers are in a much better position to find the right home and at more favorable prices,” Yun added. “However, in areas where supply remains limited, such as many Northeast markets, sellers still appear to have the upper hand.”
Supply shortages keep pressure on prices. The median price of an existing home sold in August was $416,700, up 3.1% from the same month in 2023. This is the highest price on record for August.
However, since this is a median, some of that gain is skewed toward what sold in August. Sales rose significantly for homes priced above $750,000, but fell for any home priced below $500,000.
First-time buyers accounted for just 26% of August sales, matching the record low seen in November 2021. Cash sales rose to 26%, down slightly from last year but still a historically high level.
Mortgage rates continued to fall in August and September, with the 30-year fixed rate now at 6.15%, the lowest in about two years.
