US existing home sales fell back in August as cash buyers retreated from the market, the National Association of Realtors announced on Monday. In the Midwest and Northeast sales grew, but were outweighed by declines in the West and South.
The National Association of Realtors (NAR) defines existing home sales as completed transactions that include co-ops, condominiums, townhomes and single family homes.
Existing home sales in August fell by 1.8% to a seasonally adjusted annual rate of 5.05 million, compared to a downwardly-revised 5.14 million in July.
Despite the decline, August posted the second-highest figure so far this year, but is 5.3% below August last year’s 5.33 million units.
NAR Chief Economist, Lawrence Yun, said:
“There was a marked decline in all-cash sales from investors,” he said. “On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”
“As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”
The median existing-home price for all types of homes in August rose 4.8% in a year to $218,900, marking the 30th successive month of year-over-year price increases.
The NAR said there was a steep decline in all-cash sales from investors.
At the end of August 2014, total housing inventory fell by 1.7% to 2.31 million existing homes available for sale, representing a 5.5 month supply at today’s sales pace. Sold inventory, however, is 4.5% higher than at the end of August last year.
Twenty-three percent of all transactions were all-cash sales in August, representing the lowest overall share in nearly five years. Sole buyers (individual investors), who make up the bulk of cash sales, bought 12% of homes in August, compared to 16% in July and 17% in August last year. Sixty-four percent of investors in August paid cash.
Steve Brown, NAR President says declining investor activity is good for the market because it makes it easier for people who need a mortgage to buy a house.
Regarding mortgage finance, Mr. Brown said:
“Realtors® applaud the recent policy change to eliminate post-payment interest charges on FHA-insured single-family mortgages. The prepayment penalty placed an unfair and unreasonable burden on consumers who already face high housing and closing costs.”
First-time buyer numbers low
In both July and August, 29% of existing-home sales involved first-time-buyers. For sixteen of the last 17 months, first-time buyers have made up less than 30% of all buyers in the United States.
Eight percent of all sales consisted of distressed homes (short sales and foreclosures).
Properties typically stayed on the market 53 days in August, compared to 48 days in July and 43 days in August 2013. Forty-three percent of all homes were on the market for less than one month.
The average commitment rate for a 30-year, conventional, fixed-rate mortgage in August fell to 4.12%, according to Freddie Mac, the fourth successive month of decline.
Below are some data regarding existing-home sales by region in August:
- Northeast: sales increased by 4.7% to 670,000 units, still 4.3% less than the total for August 2013. The average house sold for $265,800, i.e. 0.8% lower than in August 2013.
- Midwest: sales grew by 2.5% to 1.34 million units, still 3.9% below the total for August 2013. The average house sold for $173,800, which is 5.9% more than in August 2013.
- South: sales fell by 4.2% to 2.03 million units, which is 4.2% below the total for August 2013. The average house sold for $186,700, which is 4.7% up on August 2013.
- West: sales declined by 5.1% to 1.11 million units, which is 9.8% less than in August 2013. The average house sold for $301,900, which is 5.4% up on August last year.