US home sales decline in August

Sales of previously owned homes declined in August after three straight months of gains as persistently low supply and rising home prices stymied buyers.

Total existing-home sales, which are completed transactions that include single-family homes and condominiums, fell 4.8 percent to a seasonally adjusted annual rate of 5.31 million in August from 5.58 million in July, the National Association of Realtors (NAR) said on Monday.

Despite the drop, sales have risen year over year for 11 consecutive months and are 6.2 percent above the 5 million posted a year ago.

{mosads}“Sales activity was down in many parts of the country last month — especially in the South and West — as the persistent summer theme of tight inventory levels likely deterred some buyers,” said Lawrence Yun, the NAR chief economist.

“The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year,” he added.

Steady jobs growth has boosted the housing market, which had been slow to recover from the economic downturn. But the sector gradually hit its stride this year, contributing to rising builder confidence.

Still, there are impediments to more robust growth.

Rising prices — the median price in August was $228,700, 4.7 percent above a year ago — and a lack of supply has given many potential buyers pause as the market shakes out the kinks.

August’s price increase was the 42nd consecutive month of year-over-year gains.

And the lack of supply of homes on the market, which rose last month but is still lower than a year ago, is weighing on sales.

Total housing inventory at the end of August rose 1.3 percent to 2.29 million existing homes available for sale, which is 1.7 percent lower than a year ago.

Unsold inventory is at a 5.2-month supply at the current sales pace, up from 4.9 months in July but still shy of the six months that reflects a healthy market.

An NAR study earlier this year determined that new home construction is insufficient in many metro areas and is contributing to housing shortages and price increases.

“With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors,” Yun said.

There were positive signs even amid the hurdles faced by the market.

First-time buyers rebounded to 32 percent in August, matching the highest share of the year set in May, up from 28 percent in July.  

But that is below the 40 percent in a healthy market.

Another good sign is that distressed sales were at 7 percent, their lowest level since October 2008, which was right after the start of the financial crisis.

The report also found that single-family home sales declined 5.3 percent to a seasonally adjusted annual rate of 4.69 million in August from 4.95 million in July, but are still 6.1 percent above the 4.42 million pace a year ago.

None of the four major regions had sales increases in August, but they did run ahead of last year’s levels.

August existing-home sales in the Northeast were unchanged last month, while the Midwest’s declined 1.5 percent, sales in the South fell 6.6 percent and those in the West dropped 7.8 percent.