Home sales declined in August by more than expected after hitting pre-recession levels earlier in the summer, but prices also moderated to offer some relief to potential buyers.
Sales of existing homes fell to a 5.31 million seasonally-adjusted annual rate in August, the National Association of Realtors (NAR) reported Monday, down from a revised 5.58 million in July. Investors had expected 5.5 million.
The retreat broke three straight months of gains. Nevertheless, home sales remain up more than 6 percent from a year ago.
August’s slightly disappointing numbers could be the effect of a shortfall of available houses crimping sales, NAR chief economist Lawrence Yun said.
“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,” Yun said in a press release. “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.”
Prices have shot up as home sales have recovered throughout 2015 because of a scarcity houses to sell. Prices did fall in August, however, with the median price falling to $228,700, down from above $236,000 in June. That price was up nearly 5 percent from a year ago, and the country has seen 42 straight months of rising annual prices.
Earlier in the summer, home prices eclipsed the levels they reached during the bubble years in nominal terms. Adjusted for inflation, however, the median price is still about 15 percent below the all-time high.
Moderating prices in August are a hopeful sign regarding the threat to affordability posed by tight inventory and the possibility of mortgage rate increases.
The inventory of homes for sale grew slightly in August, to 2.29 million. That was still down by 2 percent annually. At the current pace of sales, that inventory would last 5.2 months, up from 4.9 months in August.
Yun warned that “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.”
Home-buying could become a stretch for more people as the Federal Reserve acts to raise interest rates. The central bank is expected to increase its target interest rate in the next few months, a policy shift that will put upward influence on mortgage rates.
Federal Reserve Chairwoman Janet Yellen said Thursday that the housing market remains “very depressed” and that “it is not the key driver in my own forecast of ongoing improvements in the U.S. economy.”
Some additional details in Monday’s report provided reason for optimism.
The share of first-time homebuyers jumped up to 32 percent in the month, matching the high mark for the year. Investors and policymakers have been watching that metric for signs that young workers are recovering from the recession and able to make big purchases.
The share of sales that were “distressed,” meaning foreclosures or short sales brought on by hardship, matched the lowest rate since the National Association of Realtors began keeping track in October 2008, before the worst of the foreclosure crisis.
