Sales of previously occupied US homes fell in August, driven by rising prices. This is the latest sign that the housing market is cooling, as there is fierce competition among many potential buyers.
According to the National Association of Real Estate Agents, current home sales fell 2% from July last month at a seasonally adjusted annual rate of 5.88 million units. According to FactSet, this is slightly higher than the 5.87 million economists expected.
Sales were down 1.5% from August last year. As of last month, sales were up 16% compared to the same period in 2020, but sales picked up as we recovered from the slowdown in the first few months of the pandemic. Sales have also increased by about 12% since the first eight months of 2019.
Lawrence Yoon, chief economist at NAR, said:
Home prices continued to rise last month, but at a slower pace. Average home prices rose 14.9% from August 2020 to $356,700. This annual rate of growth was modest from the 20% to 25% year-over-year growth seen earlier this year.
“The significant price hikes we saw in the first half of this year are over, and price volatility is clearly easing,” Yoon said, predicting that typical homes bought last month will increase by about a year. will increase by 5%. He said he was. From now.
Nevertheless, rising home prices remain a significant deterrent for many aspiring homeowners. Last month, first-time buyers accounted for only 29% of home sales, the lowest share since January 2019.
“Rising home prices are putting pressure on first-time buyers,” Yoon said.
The home market was fiercely competitive last year, with sellers receiving many offers above the asking price as homeowners scramble to get their homes off the ground as sales hit record lows. was often.
However, there are some signs that the heat of competition has subsided as rising prices discourage many potential buyers.
Sellers who bring homes to market haven’t seen many of the offers that have become common, and buyers are increasingly refusing to give up their right to a home inspection. Yun said last month, 23% of buyers chose to skip home inspections, down from 27% in July.
Nevertheless, the shortage of sellers continues to support the prices. Inventory of unsold homes at the end of August stood at 1.29 million units, down 1.5% from July and 32% less than a year ago. According to the NAR, the current sales momentum equates to a supply of 2.6 months.
And the homes will continue to sell within a few days after they hit the market. Homes typically remained on the market for 17 days before snapping last month. It has remained unchanged since July and decreased since August 22, 2020. NAR said around 87 per cent of the homes sold last month were in the market in less than a month.
Private investors, who account for the majority of cash sales, bought 15% of homes in July, up 14% from August 2020. Transactions accounted for 22% of total cash sales, down from 23% in July. 18% in August last year.
Buyers are still benefiting from ultra-low mortgages, which help make financing more affordable. According to mortgage buyer Freddie Mac, the average 30-year mortgage rate fell to 2.86% last week. This is currently very close to last year’s benchmark rate of 2.87%. It reached 3.18% in April this year.
However, Yoon said mortgage rates are likely to rise from here until the end of the year or 2022, citing hopes that the Federal Reserve Board will begin cutting $120 billion in monthly bond purchases. where did it go. Long term interest rate.
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