August existing home sales--including single-family homes, town homes, condominiums and co-ops--dropped to a seasonally adjusted annual rate of 5.33 million from July's downwardly revised 5.38 million, down 0.9% month-over-month, the National Association of Realtors reported Thursday morning. This is the second month in a row that existing sales slowed after a four-month growth streak that started in March.
"Healthy labor markets in most the country should be creating a sustained demand for home purchases," said Laurence Yun, NAR chief economist, in a statement. "However, there's no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn't picking up to tame price growth and replace what's being quickly sold."
Single-family resales cooled off at a faster pace in August to a seasonally adjusted rate of 4.7 million, down -2.3% month-over-month, but are still 0.6% up compared to August 2015.
The decline in single-family sales was largely driven by sales drops in the South, West and Midwest, where sales were down -4.6%, -1.9%, -1.7% compared to the previous month, respectively. The Northeast was the lone region that saw sales increase, up 3.6% to a total of 580,000 sales. The South, holding firm from last month, remained the biggest pre-owned single-family market, ending this month with 1.88 million sales.
Home prices kept climbing as under-supplied inventories continued to fall. The median price for a pre-owned single-family home rose 4.3% year-over-year to $242,200 in August, which is mostly driven by price hikes in the South (up 7.1% y-o-y) and West (up 8.7% y-o-y). The West remained the most expensive region ($350,100) among all regions.
The following is a breakdown of percent change of sales by price range in the existing single-family market.
"Hopes of a meaningful sales breakthrough as a result of this summer's historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines," Yun said.
Total housing inventory at the end of August fell 3.3% to 2.04 million existing homes available for sale, 10.1% lower than a year ago. Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from the 4.7 months reported in July.
"It's very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago," added Yun. "While recent data from the U.S. Census Bureau shows that household incomes rose strongly last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale. Without more supply, the U.S. homeo-wnership rate will remain near 50-year lows."
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