Steel Markets
Existing Home Sales Have Surprising Drop in August
Written by Sandy Williams
September 22, 2014
Existing home sales fell unexpectedly in August, ending four straight months of gains. Home sales decreased 1.8 percent to a seasonally adjusted rate of 5.05 million from a revised rate of 5.14 in July. The August sales slid well below economist forecasts of SAAR 5.2 million for the month.
The National Association of Realtors (NAR) attributes the decline to investors and all-cash purchases retreating from the market. All-cash transactions dropped to 23 percent in August and individual investors purchased just 12 percent of homes, down from 16 percent in July and 17 percent a year ago.
“There was a marked decline in all-cash sales from investors,” said Lawrence Yun, NAR chief economist. “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 added that sales activity still remains stronger than in early 2014 and is at the second highest pace in 2014. “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,” he said.
Housing inventory declined 1.7 percent to 2.31 million existing homes for a 5.5 month supply at the current sales pace but remains 4.5 percent higher than inventory levels one year ago.
Regionally, sales increased in the Midwest and Northeast, but declined in the South and West.
The median price for existing homes was $219.800, a 4.8 percent gain from August 2013. Prices have increased on a year-over-year basis for 30 consecutive months.
The Federal Reserve bond buying program is winding down but the main interest rate is expected to remain low for a considerable period after the program ends. Mortgage rates dropped to 4.23 percent in the week ended September 18 according to Freddie Mac data. Buyers are still challenged by tight credit standards and slow gains in wages.
Sandy Williams
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