The newest existing home sales report from the National Association of Realtors (NAR) painted an awfully familiar picture of the housing market — and that’s not a good thing.
Scarce inventory and high mortgage rates have combined to push affordability out of reach for many homebuyers, pushing existing home sales back another 0.7% month over month and 15.3% year over year. The dip brought resales to a seasonally adjusted annual rate of 4.04 million units in August, the slowest since January 2023 and the second-lowest rate since October 2010.
Existing home sales have now dipped on a monthly basis three consecutive times and in 17 of the past 19 months, although many of these decreases, at least on their own, have been negligible.
“Home sales have been stable for several months, neither rising nor falling in any meaningful way,” NAR chief economist Lawrence Yun said. “Mortgage rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run.”
With buyers showing increasing pessimism and the Federal Reserve indicating that rates are poised to stay higher for longer, exactly how big the impact from rate volatility will be bears watching. The growing costs of borrowing are substantial given that high home prices continue to be supported by the paucity of supply, despite lower sales. The median price for all existing homes was $407,100 in August, up 3.9% annually. Median single-family home prices rose year over year in every census region during the month, the first time that’s happened since November 2022.
Meanwhile, total housing inventory at the end of August was 1.1 million units, down 0.9% from July and 14.1% from August 2022. The typical home sold after just 20 days, and at the current sales pace, unsold inventory is at a supply of 3.3 months. That’s flat on a monthly basis but up from 3.2 months one year earlier. Yun estimated that inventory needs to “essentially double” in order to mitigate the pace of home price gains, but that might be a tall order at the moment, with high rates deterring homeowners from putting their homes on the market.