Existing Home Sales Dip in August by 0.7%
Data From The National Association of REALTORS®
The real estate market is a dynamic arena that continuously responds to various economic and regional factors. The National Association of REALTORS® (NAR) regularly provides insights into the state of the housing market, and their August report indicates a modest decline in existing-home sales. In this article, we’ll explore key findings from the data, expert commentary, and what this means for prospective buyers and sellers.
Overall Existing-Home Sales Decline
The report reveals that total existing-home sales, including single-family homes, townhomes, condominiums, and co-ops, decreased by 0.7% from July. On a year-over-year basis, sales saw a substantial decline of 15.3%. This drop underscores the market's stability over several months without significant fluctuations.
Regional Variations in Home Sales
According to NAR's report, existing-home sales in August exhibited regional variations. While some parts of the Country saw a monthly uptick, all four regions experienced year-over-year sales declines, highlighting the ongoing challenges in the housing market.
- Midwest: Sales improved in the Midwest by 1.0% month-over-month (down 16.4% year-over-year).
- Northeast: Sales remained unchanged month-over-month (22.6% year-over-year).
- South: Sales declined by 1.1% month-over-month (down 12.4% year-over-year).
- West: Sales slipped 2.6% month-over-month (down 15.7% year-over-year).
NAR's Chief Economist, Lawrence Yun, provided insights into the current state of the housing market. He noted that home sales have remained relatively stable, neither experiencing significant growth nor decline in recent months. Yun highlighted the influential role of mortgage rate changes in the short run and the positive impact of job gains in the long run.
He also pointed out that the South experienced a milder decline in sales compared to other regions, primarily due to greater regional job growth since emerging from the pandemic lockdown.
Inventory and Supply
The lack of housing supply remains a critical issue. Total housing inventory at the end of August stood at 1.1 million units, representing a 0.9% decrease from July and a substantial 14.1% decline from the previous year. This decline in inventory has resulted in a 3.3-month supply at the current sales pace, consistent with July and slightly higher than August 2022.
Home Prices Persistently Rise
Despite lower home sales, median existing-home prices have continued to climb. In August, the median existing-home price for all housing types reached $407,100, marking a 3.9% increase from the same month in the previous year. This price appreciation has been observed across all four U.S. regions.
Lawrence Yun emphasized the need for supply to essentially double in order to moderate home price gains. The demand for housing remains robust, but the scarcity of available homes has driven up prices.
Market Dynamics: Time on Market and Buyer Profiles
The REALTORS® Confidence Index revealed the following insights into market dynamics:
- Properties typically remained on the market for 20 days in August, unchanged from July but up from 16 days in August 2022.
- A significant 72% of homes sold in August were on the market for less than a month.
- First-time buyers accounted for 29% of sales in August, a slight decline from 30% in July but consistent with the previous year. This suggests that first-time buyers continue to play a substantial role in the market.
Cash Sales and Distressed Sales
Cash sales made up 27% of transactions in August, up from 26% in July and 24% in August 2022. Individual investors or second-home buyers, who often contribute to cash sales, purchased 16% of homes, the same share as in the previous month and year. Distressed sales, including foreclosures and short sales, remained stable at 1% of total sales in August.
NAR's August report provides valuable insights into the state of the housing market. While existing-home sales have experienced a decline, the market remains stable, with notable regional variations and persistent price increases. Prospective buyers and sellers should stay informed about these market dynamics and consult with real estate professionals to make informed decisions that align with their goals and circumstances.