Existing Home Sales Hit 7-Month Low as Prices Keep Rising

Existing home sales in August remained at the lowest level since January as limited inventory and higher mortgage rates continued to weigh on homebuyers, according to the National Association of Realtors (NAR). Low resale inventory and strong demand continued to drive up existing home prices, marking the third consecutive month where the median sales prices exceeded $400,000. A resurgence of mortgage rates is likely to contribute a further decline in existing home sales in the months ahead.

Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, fell 0.7% to a seasonally adjusted annual rate of 4.04 million in August. On a year-over-year basis, sales were 15.3% lower than a year ago.

The first-time buyer share fell to 29% in August, down from 30% in July and identical to August 2022. The August inventory level measure decreased slightly to 1.1 million units and was down 14.1% from a year ago.

At the current sales rate, August unsold inventory sits at a 3.3-months’ supply, identical to last month and up from 3.2-months reading a year ago. This inventory level remains very low, compared to balanced market conditions (4.5 to 6 months’ supply), and illustrates the long-run need for more home construction.

Homes stayed on the market for an average of 20 days in August, unchanged from July and up from 16 days in August 2022. In August, 72% of homes sold were on the market for less than a month.

The August all-cash sales share was 27% of transactions, up from 26% in July but and 24% a year ago. All-cash buyers are less affected by changes in interest rates.

The August median sales price of all existing homes was $407,100, up 3.9% from a year ago. The median existing condominium/co-op price of $354,600 in August, up 6.2% from a year ago.

Existing home sales in August were mixed across the four major regions. Sales in the South and West decreased 1.1% and 2.6% in August, while sales in the Midwest rose 1.0%. Sales in the Northeast remained unchanged in August. On a year-over-year basis, all four regions continued to see a double-digit decline in sales, ranging from 12.4% in the South to 22.6% in the Northeast.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose 0.9% from 76.9 to 77.6 in July. On a year-over-year basis, pending sales were 14.0% lower than a year ago per the NAR data.