For the second month in a row, existing home sales increased, according to the National Association of Realtors (NAR). Of the four major regions in the country, three saw their total sales figures climb; only the West reported a slight decline. The rise in sales can be partly attributed to declining mortgage rates. According to Lawrence Yun, chief economist for NAR, “The desire to take advantage of these promising conditions is leading more buyers to the market.”
Prices Climb Higher Home buyers will need these lower mortgage rates because home prices are continuing to climb. The median existing-home price increased 4.7% year over year to $278,200. This was the 90th month in a row where year-over-year price gains were recorded. The average property stayed on the market for 31 days in August, two days longer than both a month ago and a year ago. Of all the homes sold in August, 49% were available for sale for less than a month.
Ongoing Inventory Shortages One of the reasons for the higher home prices is the housing market’s continuing lack of inventory. Total housing stock fell to 1.86 million homes; this was down from the 1.9 million in inventory available in July. At the same time last year, there were 1.91 million homes available. At the current sales pace, it would take only 4.1 months to sell the housing stock, down from the 4.2-month supply and the 4.3-month supply recorded a month ago and a year ago, respectively. According to Yun, “Homebuilders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income.”
Who’s Buying? First-time buyers continue to make up a significant segment of the buyer market, with many tempted by low mortgage rates. First-time buyers accounted for 31% of all home sales in August; this was down 1% from July but unchanged from a year ago. According to NAR’s 2018 Profile of Home Buyers and Sellers, first-time buyers were responsible for 33% of all home purchases for the year. Investors and second-home buyers—two groups who typically purchase homes with cash–also saw investment opportunities in the current market. These two groups accounted for 14% of the buyer market in August, up from 11% a month ago and 13% a year ago. All-cash sales represented 19% of all home transactions in August, unchanged from July and down slightly 1% from August 2018.
Northeast - Existing-home sales annual rate of 710,000; an increase of 7.6% from July 2019 and 1.4% from August 2018. The median sales price decreased 0.3% from August 2018.
Midwest - Existing-home sales annual rate of 1.31 million; an increase of 3.1% from July 2019 and 2.3% from August 2018. The median sales price increased 6.6% from August 2018.
South - Existing-home sales annual rate of 2.33 million; an increase of 0.9% from July 2019 and 3.6% from August 2018. The median sales price increased 5.4% from August 2018.
West - Existing-home sales annual rate of 1.14 million; a decrease of 3.4% from July 2019, but an increase of 1.8% from August 2018. The median sales price increased 5.7% from August 2018.