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.
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Total existing-home sales, 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 inventory 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 price 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 2020 – 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 sales – 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 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%.
Single-family and Condo/Co-op Sales
Single-family home sales decreased to a seasonally adjusted annual rate of 5.19 million in August, down 1.9% from 5.29 million in July and down 2.8% from one year ago. The median existing single-family home price was $363,800 in August, up 15.6% from August 2020.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 690,000 units in August, down 2.8% from 710,000 in July but up 9.5% from one year ago. The median existing condo price was $302,800 in August, an annual increase of 10.8%.
"We will continue working with federal policymakers and stakeholders from across the industry in an effort to increase housing supply and ensure the American Dream of homeownership remains accessible to as many people as possible," said NAR President Charlie Oppler, a Realtor® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby's International Realty.
New findings from NAR research – the 2021 Q2 Metro Area Wealth Gains Report – showed homeownership is the primary source of wealth among families, but that the pace of price appreciation has outpaced wage gains, making homeownership increasingly unattainable.
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.