US home sales fell in August as inventories plummet
Sep 22 2016 by Johnny Bowman
More disappointing news for the housing market: The National Association of Realtors reported Thursday that sales of previously owned homes fell to a seasonally-adjusted rate of 5.33 million in August, down from 5.38 million in July and expectations for a 5.48 million pace.
NAR said the unexpected drop pulled existing home sales down to their second lowest pace of 2016, although sales are still up by 0.8 percent compared to 5.29 million in the same month previous year. After last month's decline, sales are at their second-lowest pace of 2016, but are still slightly higher (0.8%) than a year ago (5.29 million).
The report said single-family home sales declined 2.3 percent to a rate of 4.70 million, while existing condominium and co-op sales jumped 10.5 percent to a rate of 630,000. As a result, prices are climbing.
With inventory tight, the median house price rose 5.1 percent from a year ago to $240,200 last month.
The unsold inventory represents 4.6 months of supply at the current sales pace compared to the 4.7 months of supply at the end of July. August's price increase marks the 54th consecutive month of year-over-year gains. This is a significant decline from the 47 day average a year-earlier.
At August's sales pace, it would take 4.6 months to clear the stock of houses on the market.
"Existing inventory in August hit another record low when controlling for seasonality and household formation, down again from a record setting July", Trulia Chief Economist Ralph McLaughlin said. "Those who want to sell their home might not do so because finding another home is hard".
First-time homebuyers comprised 31% of the market in August.
"While recent data from the U.S. Census Bureau shows that household incomes rose strongly past year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale", he said.
As inventory tightened, it pressured prices higher.