News on August Home Sales Drop and Record High Prices

August Home Sales Decline

In a surprising news update, sales of previously owned homes dropped by 2.5% in August, ending at a seasonally adjusted annualized rate of 3.86 million units, as reported by the National Association of Realtors. This figure is slightly less than analyst expectations and marks a 4.2% decrease compared to August 2023. It is noteworthy that sales have been below the 4 million mark for three consecutive months, reflecting a challenging market.

Market Conditions and Inventory

The home buying environment is evolving, as stated by Lawrence Yun, NAR's chief economist, who noted that lower mortgage rates combined with increased inventory could lead to improved sales in the coming months. However, the current inventory stands at 1.35 million units, up 0.7% from July, yet still representing just a 4.2-month supply of homes—far below the balanced 6-month supply.

The Impact on Prices

• Median price of existing homes rose to $416,700.
• This figure marks a 3.1% increase from the previous year, establishing a new record for August.

While high demand persists for homes above $750,000, sales priced under $500,000 have experienced a downturn. First-time buyers accounted for only 26% of total sales in August, matching the all-time low from November 2021.

As mortgage rates continue to decrease, currently at a 2-year low of 6.15%, prospective buyers may find more favorable conditions in the upcoming months.