Despite mortgage rates hovering near record lows, existing-home sales softened in August for the second consecutive month.
Inventory was the story again, driving prices higher, and giving potential buyers pause. Unsold inventory in the market recorded its 15th consecutive month of year-over-year declines, this time retreating by over 10%.
The housing market finished at a 5.33M SAAR unit pace, down almost 1% from July’s 5.38M tally. This number represented a small year-over-year lift of +0.8%.
NAR chief economist Lawrence Yun showed concerns that even with rising wages, inventory shortages and limited new development have yielded a supply that cannot meet demand, and prices that are beyond means of many potential buyers.
“Healthy labor markets in most the country should be creating a sustained demand for home purchases. However, there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold. Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines.”
The median price for EHS transactions was $240,200 in August, up 5.1% from August 2015, making it 54 consecutive months of year-over-year price hikes.
“It’s very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago,” said Yun.
Some quick facts about the US Housing Market for August 2016:
- SAAR: 5.33M units (+0.8% year-over-year)
- Median Pricing: $240,200 (+5.1% year-over-year)
- 54rd straight month of year-over-year price advance
- Unsold Inventory: 4.6 months (Down 10.1% from August 2015, 15 straight months)
- 46% of EHS transactions were on the market <1 month (high)
- First-time buyers: 31% (Down 1 pt. from July)
For more information on the US Housing Marketing visit Realtor.org’s Market Research section.
Dave Eckstein is a Partner in the firm ESA & Company. He specializes in highly profitable market share growth for local businesses and gets a kick out of demonstrating a declining cost of customer acquisition. He plays baseball, but isn't that Dave Eckstein.