Existing-home sales retreated in August, breaking two straight months of increases, according to the National Association of Realtors. Each of the four major U.S. regions experienced declines from a month-over-month and a year-over-year perspective, according to a news release.
Total existing-home sales,1 completed transaction that includes single-family homes, townhomes, condominiums, and co-ops, fell 2.0% from July to a seasonally adjusted annual rate of 5.88 million in August. Year-over-year, sales dropped 1.5% from a year ago (5.97 million in August 2020).
“Sales slipped a bit in August as prices rose nationwide,” said Lawrence Yun, NAR’s chief economist in the news release. “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory.”
Total housing inventory2 at the end of August totaled 1.29 million units, down 1.5% from July’s supply and down 13.4% from one year ago (1.49 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from July but down from 3.0 months in August 2020.
The median existing-home price3 for all housing types in August was $356,700, up 14.9% from August 2020 ($310,400), as prices increased in each region. This marks 114 straight months of year-over-year gains.
“High home prices make for an unbalanced market, but prices would normalize with more supply,” Yun said.
New research from NAR – the Homebuilders’ Local Opportunity Index – identifies Spartanburg, S.C.; North Port, Fla.; Knoxville, Tenn.; Wilmington, N.C.; and San Antonio, Texas as the top markets with favorable opportunities for builders. After comparing various indicators, NAR found that homebuilders can build more homes with fewer risks for their businesses in these areas.
Properties typically remained on the market for 17 days in August, unchanged from July and down from 22 days in August 2020. Eighty-seven percent of homes sold in August 2021 were on the market for less than a month.
First-time buyers accounted for 29% of sales in August, down from 30% in July and 33% in August 2020. NAR’s 2020 Profile of Home Buyers and Sellers – released in late 20204 – revealed that the annual share of first-time buyers was 31%.
“Securing a home is still a major challenge for many prospective buyers,” Yun said. “A number of potential buyers have merely paused their search, but their desire and need for a home remain.”
Moreover, a recent study from NAR found that student loan debt is preventing the majority of non-owner millennials and those making over $100,000 from buying a home, according to the news release.
Individual investors or second-home buyers, who account for many cash sales, purchased 15% of homes in August, even with July but up from 14% in August 2020. All-cash sales accounted for 22% of transactions in August, down from 23% in July and up from 18% in August 2020.
Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in August, equal to the percentage seen a month prior and equal to August 2020.
According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 2.84% in August, down from 2.87% in July. The average commitment rate across all of 2020 was 3.11%.
Single-family and Condo/Co-op Sales
Single-family home sales decreased to a seasonally adjusted annual rate of 5.19 million in August, down 1.9% from 5.29 million in July and down 2.8% from one year ago. The median existing single-family home price was $363,800 in August, up 15.6% from August 2020.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 690,000 units in August, down 2.8% from 710,000 in July but up 9.5% from one year ago. The median existing condo price was $302,800 in August, an annual increase of 10.8%.
“We will continue working with federal policymakers and stakeholders from across the industry to increase housing supply and ensure the American Dream of homeownership remains accessible to as many people as possible,” said NAR President Charlie Oppler, a Realtor from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty.
New findings from NAR research – the 2021 Q2 Metro Area Wealth Gains Report – showed homeownership is the primary source of wealth among families, but that the pace of price appreciation has outpaced wage gains, making homeownership increasingly unattainable.
Existing-home sales in the Northeast slid 1.4% in August, recording an annual rate of 730,000, a 2.7 decline from August 2020. The median price in the Northeast was $407,800, up 16.8% from one year ago.
Existing-home sales in the Midwest fell 1.4% to an annual rate of 1,370,000 in August, a 2.1% decline from a year ago. The median price in the Midwest was $272,200, a 10.5% jump from August 2020.
Existing-home sales in the South slipped 3.0% in August, registering an annual rate of 2,550,000, down 0.8% from the same time one year ago. The median price in the South was $303,200, a 12.8% climb from one year ago.
Existing-home sales in the West decreased 0.8%, posting an annual rate of 1,230,000 in August, down 1.6% from one year ago. The median price in the West was $507,900, up 11.4% from August 2020.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when the monthly collection of condo data began. Before this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales before 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (before 1999, single-family sales accounted for more than 90% of transactions, and condos were measured only every quarter).
3 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s REALTORS® Confidence Index, which includes all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions, and investors are from a monthly survey for the NAR’s REALTORS Confidence Index, posted at nar. realtor.