Existing home sales in August inched down by 2.0% to 5.88 million, following an upwardly revised 6.00 million in July, according to a report released Wednesday by the National Association of Realtors.
The data continued to point to a deceleration in a still-hot housing market.
The new data continued to point to signs of deceleration in the housing market, but it is still a hot market driven by strong demand.
The unsold home inventory declined by 1.5% in August to 1.29 million, equivalent to 2.6 months of supply at the current sales pace.
While the supply was higher than the recent low of 1.9 months in January, it is still far from a balanced supply, which is at around six months.
The median price for existing homes decreased for the second straight month to $356,700 in August from its record of $362,800 in July. Still, home prices were 14.9% higher than a year ago, marking 114 straight months of year-over-year increases.
High home prices continue to cause potential buyers to postpone their purchases, but at the same time the high prices are bringing out more sellers who want to capitalize on big jumps in appreciation.
“A number of potential buyers have merely paused their search, but their desire and need for a home remain,” the association’s report said. This is in line with data on consumer sentiments released last week.
Also in the report, the share of first-time buyers was down for the fifth consecutive month in August, dropping by 1% to 29%, suggesting that first-time buyers have continued to be priced out of the market.
The takeaway
We expect the market will continue to decelerate in the remaining of the year as more houses—both new and existing—have slowly come online and demand remains on the other side of its peak. Yet it is also important to keep an eye on the supply of new houses as input costs and construction material shortages pose challenges for home builders.
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