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Real Estate

Low mortgage rates bolster August’s existing-home sales to 17-month high

Low inventory continues to push up home prices

Existing-home sales inched forward 1.3% in August from the prior month, reaching a 17-month high, according to the National Association of Realtors.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – increased to a seasonally adjusted annualized rate of 5.49 million, a gain of 2.6% above August 2018’s rate.

As expected, buyers are finding it hard to resist the current rates. The desire to take advantage of these promising conditions is leading more buyers to the market, NAR Chief Economist Lawrence Yun said.

That being said, total homes available for sale decreased from July, falling from 1.9 million existing homes on the market to 1.86 million in August. This level is down 2.6% from last year’s rate.

There was a 4.1-month supply of unsold inventory at the current sales pace, down from 4.2 in July and 4.3 a year ago. Properties stayed on the market an average of 31 days in August, rising from 29 days in July and August 2018. The report states that 49% of homes stayed on the market for less than a month.

“Sales are up, but inventory numbers remain low and are thereby pushing up home prices,” Yun said. “Homebuilders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income.”

According to NAR, the median price for an existing-home was $278,800, a gain of 4.7% from last August’s rate of $265,600. This marks the 90th straight month of year-over-year gains.

The average commitment rate for a 30-year, conventional, fixed-rate mortgage fell from 3.77% in July to 3.62% in August and the average commitment rate for all of 2018 was 4.54%, according to Freddie Mac.

“Rates continue to be historically low, which is extremely beneficial for everyone buying or selling a home,” said NAR President John Smaby. “The new condominium loan policies, as well as other reforms NAR is pursuing within our housing finance system, will allow even more families and individuals in this country to reach the American Dream of homeownership.”

First-time buyers comprised 31% of sales in August, down from July’s rate of 32% but to equal to August 2018’s rate of 31%. NAR revealed that the annual share of first-time buyers held steady at 33%.

Single-family home sales increased from a seasonally adjusted annual rate of 4.84 million in July to 4.9 million in August, which is 2.9% above a year ago. The median existing single-family home price was $280,700 in August, increasing 4.7% from August 2018. 

Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 590,000 units in August, which is 1.7% above July’s rate, but about equal to a year ago. The median existing condo price was $257,600 in August, increasing 5.2% from 2018. 

Here’s a regional breakdown of the nation’s existing-home sales:

  • Existing-home sales in the Northeast spiked 7.6% from the prior month’s rate to an annual rate of 710,000, which is a 1.4% annual increase. The median price in the Northeast decreased 0.3% from August 2018 and came in at $303,500.
  • In the Midwest, existing-home sales gained 3.1% from the prior month at an annual rate of 1.31 million, which is a 2.3% increase from August 2018’s level. The median price in the Midwest was $220,000, increasing 6.6% from a year ago.
  • Southern existing-home sales rose 0.9% to an annual rate of 2.33 million in August, up 3.6% from last year. The median price in the South rose to $240,300, increasing 5.4% from August 2018.
  • Existing-home sales in the West decreased 3.4% to an annual rate of 1.14 million in August, which is a 1.8% above last year’s rate. The median price in the West was $415,900, rising 5.7% from this time last year.

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