Existing-home sales dropped for the second straight month in August, down almost one full percent from July, according to the National Association of Realtors. NAR blames dropping sales on higher home prices and not enough inventory, despite job growth and still-low mortgage rates.
Total existing-home sales declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August, NAR reported. After last month's drop, sales are at their second-lowest pace this year, but they’re still 0.8 percent higher than a year ago.
Total housing inventory at the end of August fell 3.3 percent to 2.04 million existing homes available for sale, NAR reported. This is 10 percent lower than a year ago, and the number has been going down for 15 straight months. There is a 4.6-month supply at the current sales pace, which is down from 4.7 months in July, the report stated.
“It's very concerning to see that inventory conditions not only show no signs of improving but have actually worsened in recent months from their already suppressed levels a year ago," said Lawrence Yun, NAR’s chief economist. "While recent data from the U.S. Census Bureau shows that household incomes rose strongly last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale. Without more supply, the U.S. homeownership rate will remain near 50-year lows."
Meanwhile, job growth is having surprisingly little effect.
"Healthy labor markets in most the country should be creating a sustained demand for home purchases," Yun said. "However, there's no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn't picking up to tame price growth and replace what's being quickly sold."
The median existing-home price for all housing types in August was $240,200, NAR reported. That’s up 5.1 percent from last August, and the price increase marks the 54th consecutive month of year-over-year gains.
The share of first-time buyers was 31 percent in August, down from 32 percent both in July and a year ago, NAR reported. Last year, it was 30 percent.
"Hopes of a meaningful sales breakthrough as a result of this summer's historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines,” Yun said.