August Sales of Existing Homes Continue Strong on Lower Mortgage Loan Rates

The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in August rose 1.3% to a seasonally adjusted annual rate of 5.49 million from 5.42 million in July. Sales are up by 2.6% compared to August 2018 sales of 5.35 million.

July sales exceeded the consensus estimate for monthly sales of 5.38 million, according to a survey of economists polled by Bloomberg.

The NAR’s chief economist, Lawrence Yun, said:

As expected, buyers are finding it hard to resist the current rates. The desire to take advantage of these promising conditions is leading more buyers to the market. Sales are up, but inventory numbers remain low and are thereby pushing up home prices. … The Federal Reserve should have been bolder and made a deeper rate cut, given current low inflation rates. The housing sector has been broadly underperforming but there is huge upward potential there that will help our overall economy grow.

Existing home sales closed 2018 with a seasonally adjusted December total of 4.99 million in 2018. The seasonally adjusted number for December 2017 was 5.56 million.

Housing inventory decreased slightly in August to 1.86 million homes (from 1.9 million in July), equal to a supply of 4.1 months, down by 0.1 months compared with July. Inventory is also down from 4.3 months year over year in August 2018.

According to the NAR, the national median existing home price for all housing types in August was $278,200, down from $280,800 in July but up 4.7% compared with August 2018, and the 90th consecutive month of rising home prices. In January, the national median price was $247,500.

The percentage of first-time buyers dropped from 32% in July to 31% in August. First-time buyers accounted for 31% of sales in August 2018. For all of 2018, first-time buyers accounted for 33% of sales.

Sales of single-family homes rose from a seasonally adjusted annual rate of 4.84 million in July to 4.9 million in August and are up 2.9% compared with August 2018 sales. Sales of multifamily homes were roughly flat year over year at a seasonally adjusted annual rate of 590,000 units.

All homes were on the market for an average of 31 days in August, up by two days month over month and year over year. Distressed sales, foreclosures and short sales accounted for 2% of all August sales, unchanged compared with the prior month and down from 3% in August of last year.

The NAR also reported the following regional data:

August existing home sales in the Northeast increased 7.6% to an annual rate of 710,000 and were up 1.4% compared with August 2018 sales. The median price in the Northeast was $303,500, down 0.3% compared with the same month last year.

In the Midwest, existing home sales rose 3.1% in August to an annual rate of 1.31 million and are up 2.7% compared with the August 2018 rate. The median price in the Midwest was $220,000, up 6.6% from a year ago.

Existing home sales in the South increased by 0.9% in August to an annual rate of 2.33 million and were up 3.6% compared with 2018 sales. The median price in the South was $240,300, up 5.4% from a year ago.

Existing home sales in the West dropped by 3.4% to an annual rate of 1.14 million in August and are now up 1.8% compared with August 2018 totals. The median price in the West was $415,900, up 5.7% compared with the August 2018 median.

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