Home Sales Declined Again in August, But Prices Keep Rising
September 22, 2023
The typically hot summer homebuying season ended in summer doldrums as home sales slid again in August, but an ultra-low inventory of homes on the market pushed prices higher.
Sales of previously owned homes (which make up the bulk of home sales) fell 0.7% in August from the month prior to a seasonally adjusted, annualized rate of 4.04 million sales, according to the National Association of Realtors. August’s sales were down 15.3% from the same month last year.
The numbers reflect closings that were signed in June and July, when the average rate for a 30-year fixed-rate mortgage was in the high 6% range. In late July, rates crested above 7% and have remained there, leaving many buyers feeling priced out by more expensive mortgages.
It is not just high rates that buyers are contending with, but also a historically low level of inventory on the market. Homeowners who are locked into much lower rates are reticent to sell, leaving many potential sellers on the sidelines. There were just 1.1 million units for sale at the end of August, down 0.9% from July and down 14% year-over-year. The current inventory represents just a 3.3-month supply. Industry experts consider a six-month supply representative of a balance between buyers and sellers.
The tight supply of homes on the market has pushed prices higher. The median price of a previously owned home sold in August was $407,100. That is an increase of 3.9% from a year prior and the highest average price for August in NAR records.