Existing Home Sales Fall As Inventories Dwindle
September 24, 2021
Amid scarce availability and record-high prices, the red-hot housing market is beginning to cool as buyers find themselves priced out of the market.
Sales of previously owned homes fell 2% in August from July to a seasonally adjusted annualized rate of 5.88 million units, according to the National Association of Realtors.
This puts the sales for August 1.5% lower than they were a year prior, marking the first annual decline in 14 months. Despite the decline, sales are still above pre-pandemic levels.
Even with sales slowing, inventory continues to grow scarcer. The number of available homes for sale fell 1.5% to 1.29 million at the end of August. Compared with August 2020, inventory was 13% lower. At the current sales pace, the supply will last only 2.6 months.
The tight supply pushed the median price of a previously owned home to $356,7000, an increase of nearly 15% from August 2020. First-time buyers in particular are struggling to buy with prices so high. New homeowners accounted for just 29% of the month’s sales, the lowest portion since January 2019. Historically, first-time buyers account for 40% of all sales.
Buyers hoping that new construction may ease availability constrictions may be in for a disappointment. The Commerce Department announced this week that construction of single-family homes fell for the second consecutive month. Moreover, the number of houses authorized for construction but not yet started hit a record high last month, a sign that builders are reluctant to start new projects.