Existing-home sales dropped for the seventh straight month in August, down 0.4% from July and 19.9% YOY, according to the National Association of Realtors’ most recent data.
Sales fell to a seasonally adjusted annual rate of 4.80 million and declined in every major region.
Inventory of unsold homes fell 1.5% from July to 1.28 million, breaking a five-month streak of increases. This is a 3.2 months supply at the current sales pace.
“The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes,” said NAR Chief Economist Lawrence Yun.
“The softness in home sales reflects this year’s escalating mortgage rates. Nonetheless, homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago.”
The median price for an existing home was up 7.7% YOY to $389,500, though this is down significantly from June’s record high of $413,00.
But while appreciation is moderating, prices still rose in all regions. This is the 126th consecutive month of YOY price increases, the longest streak on record.
The typical home stayed on the market for 16 days in August, unchanged from June, while 81% of homes sold were on the market for less than a month, a slight decrease.
Yun noted that inventory will remain a problem for the foreseeable future because many current homeowners don’t want to move and lose the low interest rate they locked in during the pandemic.
“Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply,” he noted.
About six of every seven homeowners with mortgages, or 85%, have a mortgage interest rate at least a full point below today’s level of 6%.
Home buyers are taking back some power as the market rebalances after favoring only sellers these past two years.
“The overheated housing market of the past two years, which predominantly favored sellers, is beginning to regain a sense of normalcy, which is welcome news for home buyers,” George Ratiu, manager of economic research for Realtor.com, said in a statement.