The National Association of Realtors announced that existing-home sales in August rose 1.3% from July to 5.49 million—marking the second-consecutive month of growth. Overall sales, according to the NAR, are up 2.6% from August 2018.
“As expected, buyers are finding it hard to resist the current rates,” said NAR’s Chief Economist Lawrence Yun, saying the increase in sales is related to falling mortgage rates. “The desire to take advantage of these promising conditions is leading more buyers to the market.”
Average home prices for all housing types in August was $278,100, which is an annual increase of 4.7% and is the 90th-consecutive month of year-over-year growth in prices.
George Ratiu, Senior Economist for realtor.com, said buyers took advantage of low mortgage rates in August, driving sales higher.
Genworth Mortgage’s Chief Economist Tian Liu said seeing how consumers react to economic uncertainty in the coming months will be a “key question” facing the U.S. economy.
“Today’s data shows that at least for now, consumers remain confident enough to buy a home in the current market,” Liu said.
One area that continues to struggle, according to the NAR, is inventory. Total housing inventory for the month fell to 1.86 million—a slight decline from 1.90 million last month and a year-over-year drop of 2.6%. Unsold inventory is currently at a 4.1-month supply, down slightly from 4.2 months in July.
“Sales are up, but inventory numbers remain low and are thereby pushing up home prices,” Yun said. “Homebuilders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income.”
Freddie Mac revealed the average commitment rate for a 30-year fixed rate mortgage fell to 3.62% in August. Freddie Mac, however, reported the average rate for a 30-year fixed rate mortgage for August saw its highest increase since October 2018, rising to 3.73%
Yun said the Federal Reserve “should have been bolder and made a deeper rate cut,” given low inflation rates.
“The housing sector has been broadly underperforming but there is huge upward potential there that will help our overall economy grow,” he said.
The NAR states that first-time buyers were responsible for 31% of all sales in August, which is a marginal drop from July’s 32% but unchanged from August 2018.