US home buyers are busy with purchases, but there are fewer present than a few months ago. National Association of Realtors (NAR) data shows home sales fell in August. The drop was accompanied by a decline in inventory as well. Despite the relatively neutral market position, price growth is starting to slow.
US Existing-Home Sales Fell For The First Time In Over A Year
US existing-home sales continue to slow after reaching a new record earlier this year. The seasonally adjusted annual rate (SAAR) of existing-home sales reached 5.88 million in August. This represents a decline of 2.0% from the month before, and a drop of 1.5% compared to last year. That annual drop is the first seen over the past 14 months. Sales are still elevated, but coming down from the record high.
US Existing-Home Sales
The seasonally adjusted annual rate (SAAR) of existing-home sales in the US.
Source: NAR; Better Dwelling.
US Existing-Home Inventory Fell, Keeping The Market Tight
Falling home sales normally ease market conditions, but inventory fell as well. The inventory of unsold homes fell to 1.29 million at the end of August, down 1.5% from a month before. Compared to a year before, this represents a 13.4% decline. Months of inventory also fell to 2.6 months, the same as a month before. Generally it needs to reach at least 3.0 months before the pressure driving higher prices begins to ease.
US Home Prices Are Starting To See Growth Slow
The median home price edged lower from the previous month, but still retained a huge amount of growth. The unadjusted median sale price reached $356,700 in August, down 0.77% from a month before. Compared to a year ago prices are still 14.6% higher, and just 1.68% lower than this year’s peak in June. Unadjusted median price data tends to be a little volatile, but we can still see a pattern of cooling growth. It’s just the market is exceptionally hot, so it might not feel like much relief to buyers.
“We expect existing home sales to mostly move sideways over the rest of 2021 as the market contends with a familiar mix of headwinds and tailwinds,” said Nancy Vanden Houten, an economist at Oxford Economics. “strong demand and still-low mortgage rates will support home sales, but limited inventory and prices that have priced out many buyers will counter those positive forces.”
US existing-home sales are still showing elevated activity — way above pre-pandemic levels. However, there are some signs of market moderation around. Falling home sales and slowing price growth are typical of cold markets, not hot ones. Though it’s worth taking note of the inventory taper. Falling inventory can make a cooling market reverse course quickly.
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