- Existing home sales drop 2.0% in August
- The housing stock is down 13.4% compared to a year ago
- Median house price increases 14.9% from a year ago
WASHINGTON, Sept.22 (Reuters) – US home sales fell in August as supply remained tight, but there are signs that soaring house prices and demand fueled by the COVID-19 have likely run their course.
Still, prices remain high enough to keep some potential buyers out of a hot real estate market. The National Association of Real Estate Agents report released on Wednesday showed the smallest proportion of first-time buyers in over 2.5 years and homes continuing to be bought typically after only 17 days on the market.
“The recent moderation in existing home sales reflects a certain easing of the buying frenzy that continued into early 2021,” said Mark Vitner, senior economist at Wells Fargo in Charlotte, North Carolina. “The frantic race for space has sent prices skyrocketing. We continue to expect the housing market to return to balance over the next two years.”
Existing home sales fell 2.0% to a seasonally adjusted annual rate of 5.88 million units last month. Sales fell in all four regions, with the densely populated South posting a 3.0% decline. Economists polled by Reuters had predicted that sales would fall to a rate of 5.89 million units in August.
Single-family home sales fell 1.9%, while condominium / co-op sales fell 2.8%. The drop in sales coincided with a recent shift in consumer attitudes towards home buying.
Home resales, which account for the bulk of US home sales, fell 1.5% year-on-year. The annual comparison has been skewed by the sales surge caused by the pandemic in August 2020. Sales have increased 16% so far this year compared to the same period in 2020 and remain well above their level. ‘before the pandemic.
The housing market exploded at the start of the coronavirus pandemic amid an exodus from cities as people worked from home and took classes online, fueling demand for larger homes in the suburbs and beyond. low density areas.
The push, which was skewed towards the single-family segment of the market, far exceeded supply. Expensive building materials along with land and labor shortages made it more difficult for builders to scale up production. At the same time, some owners are reluctant to sell because they fear they won’t find something affordable, which allows them to keep their stocks tight.
Government data on Tuesday showed single-family home construction fell for a second straight month in August. Read more
Although the tailwind of the pandemic is fading, housing demand remains strong thanks to near-record mortgage rates and rising wages due to the tight labor market. A separate report from the Mortgage Bankers Association showed a modest increase in home purchase loan applications over the past week.
Mortgage rates could rise after the Federal Reserve on Wednesday cleared the way for a “soon” cut to its monthly bond purchases and reported interest rate hikes could follow faster than expected. Read more
Stocks on Wall Street were trading higher, recouping some of the recent losses as concerns over a default by Chinese real estate developer Evergrande eased. The dollar (.DXY) fell against a basket of currencies. The prices of longer-term US Treasuries have increased.
The median price of existing homes rose 14.9% from a year ago to $ 356,700 in August. This is a deceleration from a 23.6% jump in May. Slowing house price inflation adds to anecdotal evidence that some sellers are lowering their asking prices. Real estate agents are also finding that bidding wars are easing.
“We expect house price growth to slow further over the remainder of this year and into 2022 as the housing stock shortage eases and demand moderates,” Scott said. Anderson, chief economist at Bank of the West in San Francisco.
Sales remained concentrated in the upper market prices, with housing transactions in the below $ 250,000 price range continuing to experience double-digit declines.
Residential investment contracted in the second quarter after three consecutive quarters of double-digit growth.
The drop in August sales implies a drop in brokerage commissions. This, combined with the drop in housing starts, suggests a further decline in residential investment this quarter.
There were 1.29 million previously owned homes on the market last month, down 13.4% from a year ago. At the pace of August sales, it would take 2.6 months to deplete current stocks, down from 3.0 months a year ago. A six to seven month supply is seen as a healthy balance between supply and demand.
In August, properties were generally on the market for 17 days, unchanged from July, but down from 22 days a year ago. Eighty-seven percent of homes sold last month were on the market for less than a month.
First-time buyers accounted for 29% of sales, the lowest since January 2019 and down from 30% in July and 33% a year ago. Cash sales accounted for 22% of transactions, up from 23% in July and up from 18% a year ago.
“There is a suggestion here in moderating price gains and sales, and a declining share of first-time buyers, that a considerable part of the inventory adjustment of housing demand at low rates and movements population caused by the pandemic has occurred, “said Conrad DeQuadros, senior economic advisor at Brean Capital in New York City.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao
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