(Reuters) -Sales of previously owned U.S. homes ticked lower in August amid affordability issues for buyers thanks to still-pricey homes on the market and interest rates on mortgages that remain relatively steep despite recent drops in borrowing costs.
Home sales slipped 0.2% last month to a seasonally adjusted annual rate of 4.00 million units from an unrevised 4.01 million in July, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales would slip slightly further, to 3.96 million units. Sales rose 1.8% on a year-over-year basis.
“Home sales have been sluggish over the past few years due to elevated mortgage rates and limited inventory,” NAR Chief Economist Lawrence Yun said in a statement. “However, mortgage rates are declining and more inventory is coming to the market, which should boost sales in the coming months.”
The sales pace over the last two years has averaged right around 4 million units a month, a weaker rate than seen even during the 2007-2009 recession that was triggered by a collapse in the housing market.
The average rate on a 30-year-fixed rate mortgage recently fell to the lowest level since last fall at 6.26%, according to data from Freddie Mac, but rates remain appreciably higher than they were coming out of the COVID-19 pandemic.
The Federal Reserve cut interest rates last week for the first time since December, and markets are poised for additional cuts through this year, which may augur for additional mortgage rate reductions ahead.
Regionally, sales were divided, rising month-over-month in the Midwest and West while falling in the Northeast and South. The Midwest has outperformed other regions recently thanks to better affordability, Yun said on a conference call.
The median sales price rose 2.0% from a year earlier to $422,600 – the 26th straight year-over-year increase. Prices in August were 52% higher than in August 2019, just before the pandemic and the run-up in prices that followed the health crisis, Yun said.
Total inventory dipped 1.3% to 1.53 million units. At the current sales pace, that inventory would last 4.6 months, unchanged from July.
The share of all-cash transactions was 28%, down from 31% in July. Investors made up 21% of all transactions, up from 20% a month earlier.
First-time buyers accounted for 28% of sales in August, unchanged on the month but up from 26% a year ago.
(Reporting by Dan Burns; Editing by Andrea Ricci)
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