Existing-home sales were running at a seasonally adjusted annual rate of 5.05 million in August, down 1.8% compared to a downwardly revised 5.14 million in July, according to the National Association of Realtors (NAR). The decrease comes after four consecutive months of modest increases.
Sales were down mainly due to a decline in cash buyers, according to NAR. All-cash sales represented 23% of all transactions in August, down from 29% in July.
Individual investors, who account for most cash sales, represented about 12% of all existing-home sales in August, down from 16% last month and 17% in August 2013. Of the investors who purchased existing homes in August, 64% paid all cash.
‘There was a marked decline in all-cash sales from investors [in August],’ explains Lawrence Yun, chief economist for NAR, in a statement, adding that this is a positive development in that all-cash buyers have been artificially inflating home prices for the past couple of years.
‘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,’ Yun says.
So far, however, existing home sales to first-time home buyers have held steady at around 29% – unchanged from July. First-time buyers have represented less than 30% of all buyers in 16 of the past 17 months, NAR reports.
NAR says although August saw the second highest number of monthly home sales so far this year, they were nevertheless 5.3% below the 5.33 million-unit level seen in August 2013.
Sales increases in the Northeast and Midwest were offset by declines in the South and West. In the Northeast, sales jumped 4.7% to an annual rate of 670,000, but remained 4.3% below a year ago. The median price for a home in the Northeast was $265,800, which is 0.8% lower than a year ago.
In the Midwest, existing-home sales increased 2.5% to an annual level of 1.24 million in August, but remain 3.9% below August 2013. The median price in the Midwest was $173,800, up 5.9% from a year ago.
Existing-home sales in the South declined 4.2% to an annual rate of 2.03 million in August and are now down 4.2% from August 2013. The median price in the South was $186,700, up 4.7% from a year ago.
Existing-home sales in the West fell 5.1% to an annual rate of 1.11 million in August and are 9.8% below a year ago. The median price in the West was $301,900, which is 5.4% above August 2013.
Total housing inventory at the end of August declined 1.7% to 2.31 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. However, unsold inventory is 4.5% higher than a year ago, when there were 2.21 million existing homes available for sale.
‘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,’ Yun adds.