Adding some confusion to the national housing picture, total existing home sales in August actually fell 2.5% month over month and 4.2% from a year ago to a seasonally adjusted annual rate of 3.86 million, according to the National Association of Realtors (NAR).
Three of the four major U.S. regions showed sales declines from the previous month, with only the Midwest posting no change in August. In the Northeast, home sales were down 2% from July. In the South, sales swooned 3.9%, and in the West, home sales dropped 2.7%.
The news was a bit of a headscratcher in light of home-loan interest rates falling through much of July and August, giving some hope for better sales. First American Financial Corp., for one, had predicted existing home sales to rise in August.
Despite the setback, however, Lawrence Yun, NAR’s chief economist, remained optimistic about the future due to the lower rates and higher housing inventories.
NAR reported that total housing inventory at the end of August reached 1.35 million units, up 0.7% from July and jumping nearly 23% from one year ago. As of the end of August, there was a 4.2-month supply of unsold inventory on the market, which was up from 4.1 months in July and 3.3 months one year ago.
“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” Yun said. “The homebuying process, from the initial search to getting the house keys, typically takes several months.”
Yun said the rise in inventory implied that home buyers will be in an improved position to find the right homes at favorable prices going forward in most parts of the country. But in areas where supply is limited, such as the Northeast, sellers still hold the upper hand.
Housing prices continued to rise in all regions of the country, with the NAR estimating the median existing home price reaching $416,700 in August, up 3.1% year over year. It was the 14th consecutive month of year-over-year price increases.
