On September 22, 2016, the National Association of Realtors (NAR) reported that the existing-home sales in the U.S. economy declined 0.9% in August compared to the previous month.
In August, sales of already-built single family homes, townhomes, condominiums, and co-ops were registered at an annual pace of 5.33 million, down from 5.38 million in July. The NAR also reported that August existing home sales were at the second-lowest pace of 2016. (Source: “Existing-Home Sales Soften Further in August,” National Association of Realtors, September 22, 2016.)
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Regarding the decline in sales of already built homes, the chief economist at NAR, Lawrence Yun said, “Healthy labor markets in most the country should be creating a sustained demand for home purchases,” adding that, “there’s no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn’t picking up to tame price growth and replace what’s being quickly sold.”
Yun also said that, “Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines.” (Source: Ibid.)
Economists and investors use existing-homes sales data to assess the health of the housing market and economy in general. It’s worrisome if existing-home sales decline for an extended period of time, as it could suggest troubles ahead.
Digging deeper into the data, in August, the housing inventory stood at 2.04 million existing homes available for sale in the U.S. economy. This was 10.1% lower than a year ago and has declined for 15 consecutive months.
First-time home buyers in August amounted to 31% of all existing home sales in August. This figure was down from 32% a year ago. (Source: Ibid.)
Individual investors were certainly active in August, accounting for 13% of all existing homes sold in August; this was up from 11% in July and 12% a year ago. Total all-cash transactions amounted to 22% in August as well.
Foreclosure and short sales amounted to five percent of all existing home sales, down from seven percent a year ago. Foreclosure homes sold for 12% below the market value and short sales sold for 14% below the market value.
30-year fixed rate mortgages were 3.44% in August and have remained at this level– the lowest level since January of 2013–for two consecutive months. The average 30-year fixed rate was 3.85% in 2015.
