Even though home prices didn't rise as fast as they have in the past, fewer people were in the mortgage market in August, evidenced by fewer existing homes being purchased by Americans, according to newly released data from the National Association of Realtors.
Among single-family homes, co-ops, condos and townhomes, sales fell in August nearly 5 percent to a seasonally adjusted annual rate of 5.3 million, NAR reported. That's down from 5.6 million in July.
The slowdown wasn't enough to end the sales streak that's gone on for nearly a year, now, though. Existing-home sales have increased on a year-over-year basis for 11 months in a row, according to NAR. In fact, when this past August sales were compared with last year's results, sales were 6.2 percent higher this year than 12 months ago.
Lawrence Yun, NAR chief economist, indicated that slower sales in the South and West were chiefly responsible for the overall monthly decline. However, sales were still ahead on year-over-year basis, both in the South and West. Limited options may have played a role in the monthly decline as well.
"The persistent summer theme of tight inventory levels likely deterred some buyers," Yun noted. "The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year."
Inventory edges higher from July
Helping to slow the pace of rising home prices in August was added supply. Total inventory by the end of the month increased to 2.2 million existing homes, up 1.3 percent from July, according to NAR. On a year-over-year basis, though, supply levels fell nearly 2 percent from 2.3 million. At the current sales pace, that represents 5.2 months worth of unsold listings. In other words, it would take slightly longer than five months for supply to be exhausted, assuming that other properties don't go up for sale.
Helping to keep homes more affordable are mortgage rates. The Federal Reserve recently held its monthly meeting, where the discussion was centered on whether to increase short-term interest rates for the first time in nearly a decade. The Fed ultimately decided against the move, citing continued evidence of recessionary activity in the global economic marketplace. Had interest rates been increased, mortgage rates may have followed suit, but it's unclear to what degree.
For all of August – as well as most of the year – 30-year fixed rate mortgages have stayed below 4 percent. During the last week of the month, 30-year FRMs averaged 3.84 percent, according to Freddie Mac's Primary Mortgage Market Survey. Last year during the same seven-day stretch, 30-year FRMs were above 4 percent.
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