US Existing Home Sales Down 4.8% in August

None of the four major regions experienced sales increases in August.

This is well below analyst expectations of 5.5 million, and down from a revised 5.58 million in July. Lawrence Yun, NAR chief economist, says home sales in August lost some momentum to close out the summer.

“The persistent summer theme of tight inventory levels likely deterred some buyers”, the NAR said. A 6 month to 6.5 month supply is considered to be a balanced market. The price easing may have helped pull more first-time buyers back into the market.

Still, it’s not clear that a rate hike by the Fed – which may come at its next meetings in October or December – will have that great an impact on sales, at least in the short run. “The current, historically low interest rates are still an important factor driving the market”.

NAR released a study earlier this month that examined new home construction in relation to job gains. Even though this is not the case with the August report on existing home sales, overall data is still strong and very healthy. With this pullback, existing home sales are now on par with the pace of April 2015. “At 5.31 million seasonally adjusted, existing home sales still trend at 8-year highs”. Sales should be better considering that prices are relatively low in a low-pricing environment. The share of first time buyers was 29 percent a year ago.

There were signs of fundamental improvement in the housing market. The median is a typical market price where half the homes sold for more and half sold for less.

Analysts said the August pullback was a correction from the July surge as the housing market normalizes. Foreclosures comprised 5 percent of distressed sales, while 2 percent were short sales. It was at 10.9 months at the end of August 2014. Sixty percent of investors paid cash in August.

Existing-home sales in the West dropped 7.8 percent to an annual rate of 1.19 million in August, but remain 7.2 percent above a year ago. That was the largest month-to-month decline since… The median existing single-family home price was $230,200 in August, up 5.1 percent from August 2014.

Despite the monthly decrease, NAR noted existing home sales have risen year-over-year for 11 consecutive months and are 6.2% above a year ago. The median price in the Northeast was $271,600, which is 2.4% above August 2014. The median price in the Midwest was $181,100, up 4% from a year ago.

Sales and price information is generated by Multiple Listing Service closed sales reported by 29 participating Illinois REALTOR® local boards and associations including Midwest Real Estate Data LLC as of September 8, 2015 for the period of August 1 through Aug. 31. The appreciation was led by a 7.1 percent year-to-year advance in the West, while the South had a 6 percent increase. Prices in the West were up 7.1 per cent from a year earlier.

The median forecast of 73 economists surveyed by Bloomberg called for sales to ease to a 5.5 million annual rate.