Sales of previously owned homes saw a home sales drop of 2.5% in August compared to July, reaching a seasonally adjusted annualized rate of 3.86 million units, according to the National Association of Realtors (NAR). This marks the third consecutive month where sales stayed below the 4 million mark, reflecting a continuing decline. Additionally, sales were 4.2% lower than in August 2023. The numbers are based on completed contracts likely signed in June and July, when mortgage rates were falling but still slightly above 7%.
The inventory of available homes for sale improved slightly, increasing by 0.7% from July and 22.7% year-over-year, with 1.35 million units on the market by the end of August. However, the supply still sits at just 4.2 months, below the balanced level of six months typically seen between buyers and sellers. This tight supply has helped maintain pressure on prices, contributing to a home sales drop in many regions. The median price of a home sold in August reached a record $416,700, which is a 3.1% increase from last year.
Shifts in sales trends have also emerged, with more expensive homes—those priced over $750,000—seeing an uptick in sales, while homes priced under $500,000 experienced a home sales drop. First-time buyers made up only 26% of August’s total sales, matching an all-time low from November 2021, and all-cash transactions remained relatively high at 26%, even though they decreased slightly compared to last year.
Despite a recent decline in mortgage rates, now sitting at 6.15%, affordability challenges persist for many buyers. In certain areas, like the Northeast, where supply remains limited, sellers continue to have the upper hand, keeping the market competitive.
Thanks for reading,
Chris
