In August, the housing market saw a continued surge in home prices, even as the volume of home sales experienced a decline. This trend is attributed to the persistently low inventory of homes available for sale, which is driving prices upward, coupled with elevated mortgage rates deterring potential buyers, as per the monthly report from the National Association of Realtors (NAR).
The median price for existing homes, encompassing single-family homes, townhomes, condominiums, and co-ops, stood at $407,100 last month. This marked a notable 3.9% increase from the previous year, when the median home price was $391,700. The report by NAR noted that prices showed an uptick in all regions of the country, including the Northeast, Midwest, South, and the West.
July witnessed a similar upward trajectory in prices, reversing a five-month streak of year-over-year declines. August's median price set a new record for the month and ranked as the fourth highest across all months. Notably, August marked the third consecutive month where the median sales price exceeded the $400,000 mark.
Following a surge during the pandemic, home prices experienced a period of relative stabilization.
Lawrence Yun, Chief Economist at NAR, remarked, “Home prices continue to march higher despite lower home sales. Supply needs to essentially double to moderate home price gains.”
A remarkably low inventory of available homes is a significant factor in sustaining higher prices, as buyers vie for the limited properties in each local market.
As of the end of August, the inventory of unsold existing homes decreased by 0.9% from the preceding month, resulting in 1.1 million units available. This equates to a supply of 3.3 months at the current pace of monthly sales.
Given the scarce availability of homes, coupled with rising prices and sustained mortgage rates throughout the summer, the number of completed sales in August, most likely contracted in June or July, experienced a dip from the previous month.
The actualized sales of existing homes fell short of projections, decreasing by 0.7% from July to August, reaching a seasonally adjusted annual rate of 4.04 million units. Analysts had anticipated a 1.5% increase and a sales pace of 4.10 million.
On an annual basis, August sales showed a 15.3% decline from the previous year, when the sales pace was 4.77 million units.