U.S. Home Sales Fall in August to the Lowest Level Since January

by Aarthi Swaminathan

A 'for sale' sign in front of a home during the early autumn season in CA — David Paul Morris/Bloomberg via Getty Images

The numbers: U.S. home sales in August fell to the lowest level since January 2023.

A low number of home listings and high interest rates brought down sales of previously owned homes, which fell by 0.7% to an annual rate of 4.04 million in August, the National Association of Realtors said Thursday.

That’s the number of homes that would be sold over an entire year if sales took place at the same rate in every month as they did in August. The numbers are seasonally adjusted.

Sales activity for the month of August was at the lowest since 2010, during the Great Recession.

The drop in sales fell short of what economists on Wall Street had expected. They had forecast existing-home sales to total 4.1 million in August.

Compared with August 2022, home sales are down by 15.3%. Between January and August alone, sales fell 21%.

Key details: The median price for an existing home in August was $407,100, up 3.9% from a year ago. That was the highest price for the month of August since the NAR began tracking the data.

Home prices peaked in June 2022, when the median price of a resale home hit $413,800.

Around 31% of properties are being sold above list price, the NAR noted.

The total number of homes for sale in August fell by 14.1% from last year, to 1.1 million units. Housing inventory for the month of August was the lowest since the NAR began tracking the figure in 1999.

Homes listed for sale remained on the market for 20 days on average, unchanged from the previous month. Last August, homes were only on the market for an average of 16 days.

Sales of existing homes across the country were up only in the Midwest, by 1%. The median price of a resale home in the region was $305,300.

All-cash buyers made up 27% of sales. The share of individual investors or second-home buyers was 16%. About 29% of homes were sold to first-time home buyers.

Big picture: Home buyers today are facing an unfriendly housing market, due to the twin challenges of high mortgage rates and low inventory. Competition for a limited number of listings, along with rising home prices and higher borrowing costs, are making homeownership much more expensive and slowing the sector.

Even though buyers are not as sensitive to rates as before, as evidenced from a small uptick in purchase applications in the latest week, most experts say a drop in rates will be what prompts an increase in housing supply and improves affordability.

What the National Association of Realtors said: “It’s possible that mortgage rates may go up to 8% in the short run,” said Lawrence Yun, chief economist at the NAR.

Yun explained that rates could go substantially higher, based on how the 10-year rate was trending toward exceeding 4.5%. If rates go up, that could push home sales to a new low in the upcoming months, he added.

Yun also noted that a potential government shutdown and the expiration of the National Flood Insurance Program are also big concerns that could hurt sales further.

What are they saying? “All of the momentum for the housing market early in 2023 has evaporated in the face of rising mortgage rates. 2023 could end in a whimper for the real estate sector as any substantial pull back in rates is likely far off into 2024,” Ben Ayers, senior economist at Nationwide, said in a statement.

Market reaction: Stocks were down in early trading on Thursday. The yield on the 10-year note rose above 4.4%.

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The post U.S. Home Sales Fall in August to the Lowest Level Since January appeared first on Real Estate News & Insights | realtor.com®.

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