Sales of existing homes unchanged, trailing projections
Sales of previously owned homes were unchanged in August, indicating buyers are balking at higher prices and leaving more inventory on the market for the first time in three years, a National Association of Realtors report showed.
Contract closings were unchanged from the prior month at a 5.34 million annual rate (before the report, it was estimated it would be at a 5.37 million pace). This follows four straight declines. The median sales price increased 4.6% year-over-year to $264,800. The inventory of available properties rose 2.7% year-over-year to 1.92 million, which was the first increase in more than three years.
Borrowing costs have risen this year and property price gains — while moderating — continue to outpace wages amid a persistent shortage of available listings. Those affordability hurdles are especially burdensome for younger prospective buyers looking for their first homes.
Buyers are getting help from a steady job market and healthier finances. While overall consumer confidence remains elevated, the latest University of Michigan report showed Americans see home buying conditions as less favorable than a few years ago.
Homebuilding also is struggling to pick up steam, government data showed on Sept. 19. While housing starts rose, permits — a proxy for future construction — fell to the slowest pace since May 2017, with single-family authorizations dropping the most in seven years.
"There are buyers on the sidelines" ready to re-enter the market, Lawrence Yun, NAR's chief economist, said at a press briefing accompanying the report. "The housing market can turn for the better" as long as inventory continues to rise, he said.
Purchases rose in two of four regions, led by a 7.6% gain in the northeast; sales also rose in Midwest while declining in the south and west. At the current pace, it would take 4.3 months to sell the homes on the market, compared with 4.1 months a year earlier; the Realtors group considers less than five months' supply consistent with a tight market.
Single-family home sales were unchanged at an annual rate of 4.75 million. Purchases of condominium and co-op units unchanged at 590,000 pace.
Homes stayed on the market for an average of 29 days, compared with 30 days a year earlier.
Existing home sales account for about 90% of the market and are calculated when a contract closes. The remainder of the market is made up by new home sales, which are considered a timelier indicator and are tabulated when contracts get signed.