NAR: Existing Home Sales Slip Further in August

“The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes. The softness in home sales reflects this year’s escalating mortgage rates,” said NAR chief economist Lawrence Yun.

Total housing inventory fell 1.5% from July to 1.28 million units in August, which is comparable to this time last year. Unsold inventory stands at a 3.2-month supply—equivalent to the prior month and up from 2.6 months in August 2021.

“Inventory will remain tight in the coming months and even for the next couple of years. 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,” Yun noted.

After reaching a record high of $413,800 in June, the median price for existing homes retracted for a second consecutive month to $389,500 in August. This is still 7.7% higher year-on-year (YoY) and represents the 126th consecutive month of on-year increases.

Single-family home sales dropped 0.9% month-on-month (MoM) and were down 19.2% YoY to a SAAR of 4.28 million in August. Existing condominium and co-op sales rose 4% from July to 520,000 units in August on a SAAR, but were down 24.6% YoY.

Regionally, August’s existing-home sales in the Northeast were up 1.6% MoM but down 13.7% YoY to an annual rate of 630,000 units. In the Midwest, sales dropped 3.3% MoM and 15.9% YoY to an annual rate of 1.16 million. In the South, August’s annual sales rate of 2.13 million units was flat from the month before but down 19.3% YoY. In the West, sales rose 1.1% MoM to an annual rate of 880,000 units, but this was 29% lower YoY.

“In a sense, we’re seeing a return to normalcy with the homebuying process as it relates to home inspections and appraisal contingencies, as those crazy bidding wars have essentially stopped,” said NAR President Leslie Rouda Smith, a realtor from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas.

By Laura Miller, Laura@SteelMarketUpdate.com