After reporting sharp decreases in U.S. existing home sales over the past several months, the National Association of Realtors released a report on Wednesday showing existing home sales edged down by much less than expected in the month of August.
NAR said existing home sales declined for the seventh consecutive month but dipped by a relatively modest 0.4 percent to an annual rate of 4.80 million in August after plummeting by 5.7 percent to a revised rate of 4.82 million in July.
Economists had expected existing home sales to tumble by 2.3 percent to an annual rate of 4.70 million from the 4.81 million originally reported for the previous month.
Despite falling by much less than expected, existing home sales still dropped to their lowest level since spring of 2020.
The report also showed existing home sales in August were down by 19.9 percent compared to the same month a year ago.
“The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes,” said NAR Chief Economist Lawrence Yun. “The softness in home sales reflects this year’s escalating mortgage rates.”
He added, “Nonetheless, homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago.”
The modest monthly decrease in existing home sales came as existing home sales in the Midwest plunged by 3.3 percent.
Meanwhile, existing home sales in the South were unchanged, while existing home sales in the West and Northeast jumped by 1.1 percent and 1.6 percent, respectively.
NAR said housing inventory at the end of August totaled 1.28 million units, down 1.5 percent from 1.30 million units in July and unchanged from a year ago.
The unsold inventory represents 3.2 months of supply at the current sales pace, identical to July and up from 2.6 months in August 2021.
“Inventory will remain tight in the coming months and even for the next couple of years,” Yun said.
‘Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”
The report also showed the median existing home price was $389,500 in August, down 2.4 percent from $399,200 in July but up 7.7 percent from $361,500 in the same month last year.
Single-family home sales slid by 0.9 percent to an annual rate of 4.28 million, while existing condominium and co-op sales surged by 4.0 percent to an annual rate of 520,000.
Next Tuesday, the Commerce Department is scheduled to release a separate report on new home sales in the month of August.
Economists currently expect new home sales to slump by 2.2 percent to an annual rate of 500,000 in August following a 12.6 percent nosedive to an annual rate of 511,000 in July.
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