Existing-home sales slipped overall in August, though activity in the Midwest and Northeast remained hot.
Sales fell by 0.7% to a seasonally adjusted annual rate of 4.04 million, according to the latest data from the National Association of Realtors.
Year-over-year, sales are down 15.3%.
“Home sales have been stable for several months, neither rising nor falling in any meaningful way. Mortgage rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run,” said NAR Chief Economist Lawrence Yun.
Poor performances in the South and West overshadowed neutral activity in the Northeast and a spike in the Midwest. Yun noted that the South’s performance is an improvement over last year, however, because of regional job growth since the pandemic.
The median price for an existing home rose 3.9% to $407,100, and prices rose in every region.
“Home prices continue to march higher despite lower home sales,” Yun said. “Supply needs to essentially double to moderate home price gains.”
August’s inventory of unsold homes fell 0.9% to 1.1 million at the end of August, putting further pressure on homebuyers competing for affordable houses.
This is a 3-month supply at the current sales pace, an improvement.
The typical home stayed on the market for 20 days, while 72% of homes sold were on the market for less than a month.
Starter homes in particular have seen huge price gains as both first-time and repeat homebuyers hunt for deals.
Many would-be “move up” buyers– those who, in better financial conditions, would typically look for a larger, more expensive home– are filtering down into lower price tiers as rates limit their spending power.
In the same vein, vacation home demand is near a seven-year low, with rate locks for second homes down nearly 50% from pre-pandemic levels.
First American chief economist Mark Fleming predicts that market forces will balance some when rates settle.
“Mortgage rate stability, even if the stabilization occurs at a higher level, is the key to a housing recovery,” he wrote.
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