A “For Sale” sign advertises homes for sale in Cutler Bay, Florida, on April 20, 2023.
Joe Reddell | Getty Images
According to the National Association of Realtors, sales of previously owned homes fell 2.5% in August from July to a seasonally adjusted annualized sales volume of 3.86 million units.
That was slightly lower than analysts expected. Sales were down 4.2% from August 2023.
That number is based on closing volume — contracts likely signed in late June and July, when mortgage rates started to fall, but not as low as they are today. According to Mortgage News Daily, the average interest rate on the popular 30-year fixed loan was just over 7% in mid-June before steadily declining to 6.7% by the end of July.
“Home sales disappointed again in August, but the recent decline in mortgage rates and increased inventory is a powerful combination that will provide an environment for sales growth in the coming months,” said NAR Chief Economist Lawrence Yun. “The home buying process, It usually takes several months from the initial search to getting the keys to the house. “
The inventory of homes for sale improved slightly. As of the end of August, sales volume was 1.35 million units. An increase of 0.7% from July and an annual increase of 22.7%. However, this is still only a 4.2-month supply. A 6-month supply is considered a balance between buyers and sellers.
“Increased inventory — more strictly, supply over the next few months — means homebuyers are able to find the right home at a better price,” Yun added. “However, in areas where supply remains limited, such as many markets in the Northeast, sellers still appear to have the upper hand.”
Tight supply continues to weigh on prices. The median price of an existing home sold in August was $416,700, up 3.1% from the same month in 2023.
However, since this is a mid-range number, some of the gains are biased toward August sales. Sales of homes priced above $750,000 rose sharply, but sales of homes priced under $500,000 fell.
First-time homebuyers accounted for just 26% of August sales, the same level as historically low levels dating back to November 2021.
Mortgage rates continued to fall in August and September, with the 30-year fixed rate currently at 6.15%, the lowest level in about two years.
