News: August Home Sales Experience Unexpected Decline Amid Record Prices

Declining Home Sales Despite Falling Mortgage Rates

In August, sales of previously owned homes fell 2.5% from July, arriving at a seasonally adjusted annualized rate of 3.86 million units, per the National Association of Realtors. This figure is slightly below analysts' projections and represents a 4.2% decline compared to August last year. This marks three consecutive months where sales dipped below the 4 million mark.

Impact of Mortgage Rates on Home Sales

The count of home sales is based on closings from contracts likely signed in late June and July, when mortgage rates began to decrease but were still comparatively high. By mid-June, the average rate for a 30-year fixed loan exceeded 7%, yet had reduced to 6.7% by the end of July, as reported by Mortgage News Daily. Lawrence Yun, Chief Economist at NAR, noted, “Home sales were disappointing again in August, but the recent decrease in mortgage rates along with rising inventory could create a more favorable environment for future sales.”

Improving Inventory Amidst Persistent Demand

At the end of August, home inventory slightly improved, totaling 1.35 million units, reflecting a 0.7% increase from July and a 22.7% annual rise. This offers a 4.2-month supply of homes for sale compared to the 6-month supply deemed balanced for buyers and sellers.

• The median price of homes in August reached $416,700, marking a 3.1% increase from the previous year, representing the highest August price on record.
• Homes priced above $750,000 saw significant sales increases, while those below $500,000 decreased.
• First-time home buyers constituted 26% of sales, matching the all-time lows.

As mortgage rates fell to 6.15% in August, the housing market remains in a delicate balance, with inventory growth bringing about potential shifts in buyer opportunity.