Northeast Existing-Home Sales Increased in August; Mixed Results in Other Regions

Real Estate In-Depth | September 2018

WASHINGTON—Existing-home sales remained steady in August after four straight months of decline, according to the National Association of Realtors. Sales gains in the Northeast and Midwest canceled out downturns in the South and West.

A bright spot for the residential markets was in the Northeast, which saw its August existing-home sales rise 7.6% to an annual rate of 710,000. However, it should be noted that August 2018 sales were 2.7% below a year earlier. The median price in the Northeast was $292,800, which was up 2.6% from August 2017.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, did not change from July and remained at a seasonally adjusted rate of 5.34 million in August. Sales are now down 1.5% from a year ago (5.42 million in August 2017).

Lawrence Yun, NAR chief economist, says the decline in existing home sales appears to have hit a plateau with robust regional sales. “Strong gains in the Northeast and a moderate uptick in the Midwest helped to balance out any losses in the South and West, halting months of downward momentum,” he said. “With inventory stabilizing and modestly rising, buyers appear ready to step back into the market.”

The median existing-home price for all housing types in August was $264,800, up 4.6% from August 2017 ($253,100). August’s price increase marked the 78th straight month of year-over-year gains.

Total housing inventory at the end of August also remained unchanged from July at 1.92 million existing homes available for sale, and was up from 1.87 million a year ago. Unsold inventory was at a 4.3-month supply at the current sales pace, consistent from last month and up from 4.1 months a year ago.

Properties typically stayed on the market for 29 days in August, up from 27 days in July but down from 30 days a year ago. Fifty-two percent of homes sold in August were on the market for less than a month.

“While inventory continues to show modest year over year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” said Yun. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory—especially moderately priced, entry-level homes—would propel sales.”

Realtor.com’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in August were Midland, TX; Fort Wayne, IN; San Francisco-Oakland-Hayward, CA.; Columbus, OH and Boise City, ID.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage increased to 4.55% in August from 4.53% in July. The average commitment rate for all of 2017 was 3.99%.

“Rising interests rates along with high home prices and lack of inventory continues to push entry-level and first-time home buyers out of the market,” said Yun. “Realtors continue to report that the demand is there—that current renters want to become homeowners—but there simply are not enough properties available in their price range.”

First-time buyers accounted for 31% of sales in August, down from last month (32%) but the same as a year ago. NAR’s 2017 Profile of Home Buyers and Sellers—released in late 2017—revealed that the annual share of first-time buyers was 34%.

“Realtors across the country report that their clients waver about the decision to list their home; they are excited by the prospect of receiving many offers, they are concerned that they will not be able to find a new home to purchase,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, MI and CEO of RE/MAX Boone Realty. “Unfortunately, this fluctuating view is contributing to the short supply of homes. Buyers hoping to find an entry level home in this market should work with a Realtor and be prepared to move quickly as listings sell quickly.”

All-cash sales were 20% of transactions in August, unchanged from July and a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in August, unchanged from July and down from 15% a year ago.

Distressed sales—foreclosures and short sales—were 3% of sales in August (lowest since NAR began tracking in October 2008), unchanged from last month and down from 4% a year ago. Two percent of June sales were foreclosures and 1% were short sales.

Danielle Hale, chief economist for realtor.com, said in response to August’s home sales results, “Existing home sales continued to struggle in August. While they were unchanged from July, the slip from last year marks the sixth-straight month of yearly declines. Although the listings decline is slowing and inventories increased slightly from last August, sales still reflect the fact that we’ve been in the midst of the largest inventory shortage of all-time for the last three years.”

She added, “Unfortunately, the picture isn’t getting rosier any time soon, thanks to Hurricane Florence. Before the hurricane, the Carolinas accounted for about 6% of U.S. homes for-sale and with many homeowners still displaced, property damage is expected to be extensive.”

Single-family and Condo/Co-Op Sales

Single-family home sales were at a seasonally adjusted annual rate of 4.75 million in August, unchanged from July, and were 1.0% below the 4.8 million sales pace a year ago. The median existing single-family home price was $267,300 in August, up 4.9% from August 2017.

Existing condominium and co-op sales were at a seasonally adjusted annual rate of 590,000 units in August (unchanged from last month), and were down 4.8% from a year ago. The median existing condo price was $244,500 in August, which was up 2.0% from a year ago.

Regional Breakdown

In the Midwest, existing-home sales rose 2.4% to an annual rate of 1.28 million in August, but were still down 0.8% from a year ago. The median price in the Midwest was $208,500, up 3.4% from last year.

Existing-home sales in the South decreased 0.4% to an annual rate of 2.23 million in August, up from 2.19 million a year ago. The median price in the South was $227,900, up 3.2% from a year ago.

Existing-home sales in the West dropped 5.9% to an annual rate of 1.12 million in August, 7.4% below a year ago. The median price in the West was $392,900, up 4.8% from August 2017.