Sales of previously owned 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.
That's slightly below analysts' expectations. Sales were 4.2% lower than August 2023. That marks three straight months of sales below the 4 million mark, year-over-year.
That statistic is based on contracts that were likely signed in late June and July, when mortgage rates were starting to fall but not as low as they are today. The average rate on the popular 30-year fixed-rate loan was just above 7% in mid-June and then steadily declined to 6.7% by the end of July, according to Mortgage News Daily.
“Home sales were disappointing again in August, but recent developments in lower mortgage rates coupled with increased inventory are a potent combination that should provide the right environment for higher sales in the coming months,” said Lawrence Yun, chief economist at the National Association of Realtors. “The home buying process, from initial search to getting the keys to a home, typically takes several months.”
A “For Sale” sign advertises a home for sale on April 20, 2023, in Cutler Bay, Florida.
Joe Rydell | Getty Images
The inventory of homes for sale improved slightly. There were 1.35 million units for sale at the end of August. That’s up 0.7% from July and 22.7% year over year. However, supply is still only 4.2 months. A 6-month supply is considered balanced between buyers and sellers.
“The high inventory — and technically, the supply that accompanies it in the coming months — means that homebuyers are in a much better position to find the right home at a more favorable price,” Yun added. “However, in areas where supply remains tight, such as many markets in the Northeast, sellers still appear to have the upper hand.”
Limited supply is keeping 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. That’s the highest price ever for August.
But since that figure is an average, some of that gain is skewed toward what was sold in August. Sales rose significantly for homes priced above $750,000, but fell for anything under $500,000.
First-time buyers accounted for just 26% of August sales, matching the all-time low set in November 2021. Cash sales were 26%, slightly lower than a year ago but still historically high.
Mortgage rates continued to fall through August and September, with the 30-year fixed rate now at 6.15%, the lowest level in about two years.
