Housing Market Update: Home Sales Remain Steady in August amid Surging Prices

Sales of previously owned homes declined by 0.7% in August compared to July, reaching a seasonally adjusted annual rate of 4.04 million units, as reported by the National Association of Realtors. These sales were 15.3% lower than August of the previous year.

This data is based on the closure of contracts likely signed in June and July, when the average rate for the popular 30-year fixed mortgage was in the high 6% range. By the end of July, it had increased to over 7%, negatively impacting affordability.

“Home sales have remained stable for several months, without any significant increase or decrease,” said Lawrence Yun, the NAR’s chief economist, in a statement. “Changes in mortgage rates will have a significant short-term impact, while job gains will have a consistent positive impact in the long run.”

However, the challenge for potential buyers is not only the higher interest rates. Available properties are scarce in the market, with just 1.1 million units for sale in August, representing a 0.9% decrease from the previous month and over 14% decrease from the previous year. Currently, there is only a 3.3-month supply of housing inventory, whereas a balanced market would have a six-month supply to meet buyer and seller demands.

The limited supply has contributed to surging prices again. In August, the median price of a sold home reached $407,100, marking a 3.9% increase from the previous year and the highest reported price for the month of August.

Yun stated that the supply of homes needs to double in order to moderate these price gains.

“Homeowners are in a good position, but Realtors and mortgage brokers are facing challenges, and renters are becoming increasingly frustrated,” Yun added.

Sales remain weakest in the lower-end market, where the supply is the most limited. Although sales decreased across all price ranges, the decline was almost negligible for homes priced above $1 million, and in fact, sales in that range were higher in both the South and the Midwest.

“Already, rising home-buying costs and declining rents have made renting more favorable than buying in the majority of the 50 largest metropolitan areas,” said Danielle Hale, Realtor.com’s chief economist, in a statement. “This holds true not only in technology hubs like Austin and San Francisco but also in affordable markets like Columbus, Ohio.”