NAR said existing home sales tumbled by 4.8% to a seasonally adjusted annual rate of 5.31 million in August from a downwardly revised 5.58 million in July.
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Home sales may get a boost in the coming months because Federal Reserve policymakers on Thursday decided against raising the short-term interest rate they control.
Nela Richardson, chief economist at real estate broker Redfin, says most home buyers aren’t likely to be deterred by a small increase in mortgage rates. That was still up 4.7 per cent from a year earlier, but left the year-over-year rate at its lowest since August 2014.
The report said the median existing home price for all housing types was USD228,700 in August, down 1.3% from USD231,800 in July but up 4.7% from USD218,400 a year ago.
Also Monday, Realtors reported: a median sale price of $120,000, up 9.8 percent from $109,250 in the same month a year ago; and 5.8 months’ supply of inventory, down 15.3 percent year over year from 6.8.
Meanwhile, the median sale price of a home rose by nearly 10 percent and the months’ supply of homes on the market is now within tenths of a percent from the figure Realtors consider an indicator of a market favoring neither buyer nor seller. The median price in the Northeast was $271,600, which is 2.4% higher than August 2014. Home sales had plunged to an annual rate of just 4 million when the Fed pegged its rate to zero. Forty percent of homes sold in August were on the market for less than a month. Permits for single-family home construction, the largest and most economically significant part of the market, climbed to the highest level since January 2008. “The potential for mortgage rates to increase before the year’s end may help propel a strong market into the fall as buyers hope to capitalize on the lower rates still available”.
In the Midwest, existing home sales declined 1.5% to an annual rate of 1.28 million in August, but remain 5.8% above August 2014. That compares with the 6.06 percent average in the five years leading to the last recession.
Distressed sales, comprised of foreclosures and short sales – in which the lender agrees to a transaction for less than the balance of the mortgage – accounted for 7 percent of the total, matching the lowest since October 2008. But the median home price has increased 4.7 percent during that time, more than double the increase in average hourly pay. Compared with August 2014, inventory dropped 1.7 percent.
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August was shaping up to be a fairly strong month for the housing sector as the reports so far for housing permits and the home price index showed continued momentum from July. The median price in the South was $196,300, up 6.0% from a year ago. The median price in the West was $321,300, which is 7.1 percent above August 2014.
