Sluggish August caps off ‘disappointing’ summer
Existing homes sales were down 4.2% year-over-year as prices kept climbing, keeping buyers sidelined. The good news: Inventory continues to build.
The numbers don't lie: This was not a summer to remember, with home sales down and many buyers still sidelined by high prices.
A cool summer: Existing home sales fell 2.5% between July and August to a seasonally adjusted annual rate of 3.86 million — down 4.2% compared to a year ago, according to the National Association of Realtors.
The slowdown was most pronounced in the South, where existing home sales slid 6% year-over-year and 3.9% from July. The Midwest also saw a substantial annual decline of 5.2%, but no change from the month prior.
Sales in the West were down 1.4% year-over-year and off by 2.7% from July, while in the Northeast, existing sales were flat compared to a year ago but down 2% month-over-month.
Prices stayed hot: Even with the slowdown, home prices rose 3.1% year-over-year to a median price of $416,700. It's the 14th straight month of year-over-year increases, according to NAR. The Northeast saw the biggest jump, with median prices up 7.7%, while the West had the highest overall median price at $622,500.
While many real estate agents missed out on the typical summer rush, things could be looking up this fall and next spring.
"Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months," said NAR Chief Economist Lawrence Yun.
Approaching balance: With fewer homes selling, inventory continues to build. NAR estimates the monthly supply was 4.2 months in August, getting it closer to what's considered a balance market between buyers and sellers.
"The rise in inventory — and, more technically, the accompanying months' supply — implies home buyers are in a much-improved position to find the right home and at more favorable prices," Yun said. "However, in areas where supply remains limited, like many markets in the Northeast, sellers still appear to hold the upper hand."
Having more homes to choose from is good news for buyers, but the continued rise in prices will make affordability a challenge even with lower mortgage rates, said Lisa Sturtevant, chief economist at Bright MLS.
"While well-priced homes will still attract a lot of buyers, sellers need to be prepared to negotiate not only on price, but also on concessions, including home inspection and appraisal contingencies, and closing cost assistance," Sturtevant said.