The U.S. existing-housing market cooled off considerably in August, according to the National Association of Realtors, with the probable cause being a lack of inventory and the beginning of the traditionally slower buying season.
Total existing-home sales fell 4.8 percent in August, to a seasonally adjusted annual rate of 5.31 million, down from 5.58 million in July. Compared to a year ago however, sales are still up 6.2 percent and have increased on a yearly basis for the past 11 straight months.
“Sales activity was down in many parts of the country last month — especially in the South and West — as the persistent summer theme of tight inventory levels likely deterred some buyers,” said NAR chief economist Lawrence Yun. “The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year.”
The national median existing-home price dropped to $228,700 last month, down from $231,800 in July. The price is still up 4.7 percent from August 2014 though, marking the 42nd consecutive month of year-over-year gains.
Inventory actually increased in August, up 1.3 percent to 2.29 million homes for sale, although it was down 1.7 percent compared with the previous year. At the current sales pace, there was a 5.2-month supply of homes on the market.
Interest rates fell in August, with the 30-year fixed rate conventional mortgage dipping to an average rate of 3.91 percent, down from 4.0 percent in July, according to Freddie Mac. “When the Federal Reserve decides to lift short–term rates — likely later this year — the impact on mortgage rates and overall housing demand will likely not be pronounced,” said Yun. “With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates — especially if today’s stronger labor market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets.”