For the third month in a row, median home prices surpassed $400,000; at the end of August, median existing-home prices reached $407,100, an increase of 3.9% year over year. According to the National Association of Realtors (NAR), all sales regions in the country reported price increases. Yet these increases came despite lower home sales. According to Lawrence Yun, chief economist for NAR, “Supply needs to essentially double to moderate home price gains.”
Housing Supply Dynamics
Unfortunately, the country’s housing supply is a long way off from doubling. By the end of August, there were 1.1 million units available on the market, down 0.9% from a month ago and 14.1% from a year ago. At the current sales pace, this inventory would supply the market for just 3.3 months, unchanged from July but up from a 3.2-month supply in August 2022.
Supply and Demand in the Market
In another sign of the tight supply, the average property remained on the market for 20 days in August, according to the “REALTORS® Confidence Index.” This was unchanged from a month ago and up from 16 days a year ago. Of all the homes sold in August, 72% were available for less than one month. Despite the tight supply, home sales have remained stable for the past few months, without any significant increases or decreases. Mortgage rates are expected to have a big impact on sales over the short term. Rates are currently increasing, with a 30-year fixed-rate mortgage averaging 7.18% as of September 14, up from 7.12% a week earlier and 6.02% a year earlier. However, over the long term, Yun expects job gains will have more of a steady, positive impact. “The South had a lighter decline in sales from a year ago due to greater regional job growth since coming out of the pandemic lockdown,” said Yun.
First-Time Buyers and Investor Trends
First-time buyers accounted for 29% of all transactions in August, down from 30% in July but unchanged from a year earlier. Twenty-seven percent of all sales in August were all-cash, up from 25% from a month ago and 24% from a year ago. Individual investors or second-home buyers—who typically make up most of the cash sales—were responsible for 16% of all home purchases, unchanged from both a month and a year ago.
Northeast: Existing-home sales annual rate of 480,000; no change from July 2023 but a decrease of 22.6% from August 2022. The median sales price of $465,700 represented a 5.8% increase from August 2022.
Midwest: Existing-home sales annual rate of 970,000; an increase of 1% from July 2023 but a decrease of 16.4% from August 2022. The median sales price of $305,300 represented a 6.8% increase from August 2022.
South: Existing-home sales annual rate of 1.84 million; a decrease of 1.1% from July 2023 and 12.4% from August 2022. The median sales price of $366,100 represented a 3.2% increase from August 2022.
West: Existing-home sales annual rate of 750,000; a decrease of 2.6% from July 2023 and 15.7% from August 2022. The median sales price of $609,300 represented a 1% increase from August 2022.