US Existing Home Sales Pull Back More Than Expected In August

Flickr/Images Money/TaxRebate.org.ukExisting-home sales dropped 4.8% at an annual rate of 5.31 million in August, according to the National Association of Realtors.

Overall inventories of existing home also rose 1.3 percent in August, but are 1.7 percent lower than a year ago.

The housing market has been adding to quarterly economic growth although home sales and construction remain far below levels seen in the years before the 2007-09 recession. The median existing-home price for all housing types in August was $228,700, which is 4.7 percent above August 2014 ($218,400).

Although tight inventory continues in the Dayton area, listings submitted in the month of August increased over three percent to 2,074 entries.

At the current sales pace, it would take 5.2 months to sell those houses, compared with 4.9 months at the end of the prior month. A year ago, first-time buyers represented 29 percent of all buyers.

Home sales may remain steady in the coming months because Federal Reserve policymakers last Thursday decided against raising the short-term interest rate they control. “The potential for mortgage rates to increase before the year’s end may help propel a strong market into the fall as buyers hope to capitalize on the lower rates still available”. Properties typically stayed on the market for 47 days in August, an increase from 42 days in July but below the 53 days in August 2014. Foreclosed homes were on the market for an average of 66 days and short sales took a median of 124 days to sell. Forty percent of homes sold in August were on the market for less than a month.

Economists had estimated that existing home sales fell 1.6% to an annual rate of 5.50 million. From our data, the percentage of distressed sales among the total sales for the Chicago PMSA was 13.5 percent in August. Five% of August sales were foreclosures and 2% were short sales. Sales were unchanged in the Northeast, where price gains were smallest.

This followed a 1.8% rise in July, revised lower, to an annual rate of 5.58 million. The median existing single-family home price was $230,200 in August, up 5.1 percent from August 2014. Home sales had plunged to an annual rate of just 4 million when the Fed pegged its rate to zero. The median existing condo price was $217,400 in August, which is 2.2% above a year ago.

August existing-home sales in the Northeast remained unchanged at an annual rate of 700,000 and are now 6.1% above a year ago. In August 2014 it averaged 4.11 percent.

Existing home sales for came in at a lower-than-expected level of 5.31 million units; with this pullback, existing home sales are now on par with the pace set in April. But the median home price has increased 4.7 percent during that time, more than double the increase in average hourly pay.