NAR: Existing-Home Sales Fell 4.8% In August

Posted by Patrick Barnard on September 21, 2015 No Comments
Categories : Residential Mortgage

Existing-home sales, including condos and co-ops, reached an adjusted annual rate of 5.31 million in August – a decrease of 4.8% compared with the annual rate of 5.58 million in July but an increase of 6.2% compared with the rate of 5.00 million in August 2014, according to figures released by the National Association of Realtors (NAR).

Sales were down in all four regions. The drop icomes after three straight months of month-over-month increases. On a year-over-year basis, existing-home sales increased for 11 of the previous 12 months, according to NAR.

Sales of single-family homes (no condos or co-ops) reached an annual rate of 4.69 million in August, a decrease of 5.3% compared to the rate of 4.95 million in July, but 6.1% above the rate of 4.42 million in August 2014.

Sales of existing condominiums and co-ops sold at an annual rate of about 620,000 units, a decrease of 1.6% compared to 630,000 units in July, but up 6.9% compared to 580,000 units in August 2014.

Typically, existing home sales hit a lull in late summer, so the trend is not unusual. But tight inventory may have also played a role in the drop. In a release, Lawrence Yun, chief economist for NAR, says, ‘The persistent summer theme of tight inventory levels likely deterred some buyers.’

‘The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year,’ Yun adds.

The average existing-home price (including condos and co-ops) in August was $228,700, an increase of 4.7% compared to August 2014, when the average price was $218,400.

The average price for an existing single-family home was $230,200, up 5.1% from August 2014, while the average condo price was $217,400, 2.2% above a year ago.

As of August, U.S. home prices had increased for 42 consecutive months, on a year over year basis.

As of the end of August there were about 2.29 million existing homes available for sale – an increase of 1.3% compared to July but down 1.7% compared to August 2014. This is about a 5.2-month supply at the current sales pace, up from 4.9 months in July.

‘With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors,’ Yun says.

First-time buyers rebounded to 32% of all buyers in August, up from 28% in July and up from 29% a year earlier.

Fixed mortgage rates continued to hover just above 4%, just as they did in July.

Yun says he agrees with other experts that should the Fed decide to raise rates later this year or in 2016, the impact on the mortgage market and existing home sales will be negligible.

‘The impact on mortgage rates and overall housing demand will likely not be pronounced,’ says Yun. ‘With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates – especially if today's stronger labor market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets.’

Distressed sales, including foreclosures and short sales, continued to represent about 7% of all home sales.

NAR released a study earlier this month that examined new home construction in relation to job gains. The findings reveal that homebuilding activity is currently insufficient in a majority of metro areas and is contributing to ongoing housing shortages and unhealthy price growth.

In a related note, Chris Polychron, president for NAR, adds in the release that Realtors worked hard over the summer to prepare for the Oct. 3 implementation of Know Before You Owe, also known as the TILA-RESPA Integrated Disclosure rule.

‘A large majority of Realtors have taken some form of training to prepare for the new disclosure requirements,’ he says. ‘As the ruling goes into effect next month, communication is crucial between all parties involved in a real estate transaction to ensure consumers get to closing seamlessly and without delay. NAR will monitor the progress of the rule in the weeks ahead and will share any concerns that arise as part of our continued partnership with the Consumer Financial Protection Bureau.’

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