In a significant report released by the National Association of Realtors (NAR), it was noted that existing home sales in the United States fell more than anticipated last month, particularly due to a dip in the single-family housing sector. This decline, amounting to a 2.5% decrease month over month in August, brought the seasonally adjusted annual rate down to 3.86 million units, well below the consensus forecast of 3.9 million as per a Bloomberg survey.
On a yearly basis, existing home sales were down 4.2%. The segment of single-family home sales experienced a notable decline of 2.8% sequentially, resulting in a revised annual rate of 3.48 million units in August, alongside a decrease of 3.3% in comparison to August 2023. Conversely, existing condominium and cooperative sales remained static at 380,000 units from the previous month, marking a decline of about 12% on a year-over-year basis.
Lawrence Yun, the Chief Economist at NAR, expressed his disappointment over the home sales figures, stating, "Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months." This sentiment suggests a potential recovery trajectory as economic conditions stabilize.
On a related note, Redfin (RDFN) has reported that existing home sales in August reached the lowest level since records began in 2012, with the exception of May 2020, during the peak of the COVID-19 pandemic, which severely impacted housing market activity. The presence of lower mortgage rates is particularly significant as it alleviates some of the monthly costs that have been heightened by rising home prices, which, according to NAR data, climbed by 3.1% year over year to reach a median sales price of $416,700 in August.
The inventory dynamics also paint an interesting picture, as unsold stock rose to a 4.2-month supply in August at the current sales pace—up from 4.1 months in July and 3.3 months in August of the previous year. The total inventory saw a modest uptick of 0.7% month over month and an impressive 23% increase year over year, amounting to 1.35 million units available on the market.
Yun commented on this inventory data, asserting that it suggests buyers are now positioned in a "much-improved position to find the right home and at more favorable prices." However, he cautioned that buyers in several markets, especially in the Northeast, still face challenges due to constrained supply.
Additionally, in a noteworthy development, the Federal Reserve implemented a 50 basis point cut to its benchmark interest rate on Wednesday. As a consequence, the 30-year fixed rate for conforming loan balances has dropped to its lowest level since September 2022 during the week ended Friday. This reduction has sparked a surge in US mortgage applications, as reported by the Mortgage Bankers Association, reflecting the eagerness of potential buyers navigating the evolving landscape of the housing market..