NAR: Existing-Home Sales Recede 2.0% in August

Existing-home sales retreated in August, breaking two straight months of increases, according to the National Association of Realtors®. Each of the four major U.S. regions experienced declines on both a month-over-month and a year-over-year perspective.

Key Highlights

– Existing-home sales dropped 2% on a seasonally adjusted annual rate from July to August.
– The inventory of unsold homes decreased 1.5% to 1.29 million from July to August – equivalent to 2.6 months of the monthly sales pace.
– The median existing-home sales price rose at a year-over-year pace of 14.9%.

Total existing-home sales,¹ https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 2.0% from July to a seasonally adjusted annual rate of 5.88 million in August. Year-over-year, sales dropped 1.5% from a year ago (5.97 million in August 2020).

“Sales slipped a bit in August as prices rose nationwide,” said Lawrence Yun, NAR’s chief economist. “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory.”

Total housing inventory² at the end of August totaled 1.29 million units, down 1.5% from July’s supply and down 13.4% from one year ago (1.49 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from July but down from 3.0 months in August 2020.

The median existing-home price³ for all housing types in August was $356,700, up 14.9% from August 2020 ($310,400), as prices increased in each region. This marks 114 straight months of year-over-year gains.

“High home prices make for an unbalanced market, but prices would normalize with more supply,” Yun said.

New research from NAR – the Homebuilders’ Local Opportunity Index – identifies Spartanburg, S.C.; North Port, Fla.; Knoxville, Tenn.; Wilmington, N.C.; and San Antonio, Texas as the top markets with favorable opportunities for builders. After comparing various indicators, NAR found that homebuilders can build more homes with less risks for their businesses in these areas.

Properties typically remained on the market for 17 days in August, unchanged from July and down from 22 days in August 2020. Eighty-seven percent of homes sold in August 2021 were on the market for less than a month.

First-time buyers accounted for 29% of sales in August, down from 30% in July and 33% in August 2020. NAR’s 2020 Profile of Home Buyers and Sellers – released in late 2020⁴ – revealed that the annual share of first-time buyers was 31%.

“Securing a home is still a major challenge for many prospective buyers,” said Yun. “A number of potential buyers have merely paused their search, but their desire and need for a home remain.”

Moreover, a recent study from NAR found that student loan debt is preventing the majority of non-owner millennials and those making over $100,000 from buying a home.

Individual investors or second-home buyers, who account for many cash sales, purchased 15% of homes in August, even with July but up from 14% in August 2020. All-cash sales accounted for 22% of transactions in August, down from 23% in July and up from 18% in August 2020.

Distressed sales⁵ – foreclosures and short sales – represented less than 1% of sales in August, equal to the percentage seen a month prior and equal to August 2020.

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 2.84% in August, down from 2.87% in July. The average commitment rate across all of 2020 was 3.11%.

Regional Breakdown

Existing-home sales in the Northeast slid 1.4% in August, recording an annual rate of 730,000, a 2.7 decline from August 2020. The median price in the Northeast was $407,800, up 16.8% from one year ago.

Existing-home sales in the Midwest fell 1.4% to an annual rate of 1,370,000 in August, a 2.1% decline from a year ago. The median price in the Midwest was $272,200, a 10.5% jump from August 2020.

Existing-home sales in the South slipped 3.0% in August, registering an annual rate of 2,550,000, down 0.8% from the same time one year ago. The median price in the South was $303,200, a 12.8% climb from one year ago.

Existing-home sales in the West decreased 0.8%, posting an annual rate of 1,230,000 in August, down 1.6% from one year ago. The median price in the West was $507,900, up 11.4% from August 2020.

The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.

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For local information, please contact the local association of Realtors® for data from local multiple listing services (MLS). Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

NOTE: NAR’s Pending Home Sales Index for August is scheduled for release on September 29, and Existing-Home Sales for September will be released October 21; release times are 10:00 a.m. ET.

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¹ Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs. Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions. The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns. Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

² Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).

³ The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received. The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

⁴ Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s REALTORS® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

⁵ Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s REALTORS® Confidence Index, posted at nar.realtor.

Source: National Association of Realtors