ORANGE COUNTY, California – Second-hand home sales fell 2% in August from July at a seasonally adjusted rate of 5,880,000 units, according to the National Association of Realtors.
Television station CNBC reported that sales were 1.5% lower than in August 2020, the first decline in 14 months. However, sales are still high compared to pre-pandemic levels.
“The housing market is clearly calming down,” said Lawrence Yun, chief economist for Realtors.
Home supply fell 1.5% month-on-month to 1.29 million units at the end of August. Compared to August 2020, the number of homes on the market has decreased by 13%, a number that has been gradually decreasing over the past few months. At the current rate of home sales, the house will have enough to sell in 2.6 months.
“Hopefully there will be more backlogs coming soon, once the eviction moratorium ends,” Yun said.
The meager supply pushed the median home price in August to $356,700, up 14.9% from August 2020.
The median house price is also skewed as the luxury housing market remains hot. Sales of homes priced under $250,000 were down from a year ago, while sales of homes priced over $1 million were up 40%.
First-time buyers accounted for only 29% of total sales, the lowest level since January 2019. Historically, first-time buyers typically account for 40% of buyers.
The market as a whole is becoming less competitive, Yun said, with the number of buyers falling and the number of buyers giving up on test provisions also decreasing. Offers per home are now 3.8 compared to 4.5 a month ago.
Interest rates on 30-year fixed mortgages began falling in June from 3.25% to a low of 2.78% in early August, according to Mortgage News Daily. The drop should have helped first-time buyers the most, given the least financial viability and the most sensitivity to interest rates, but it’s clearly not enough.
New home sales in July increased slightly monthly but were down 27% compared to July 2020.
Builders have raised prices to offset rising land, labor and material costs. As some of the nation’s largest builders report, supply chain problems are hampering production and leading to fewer new home transactions. (Ng.Tr)[kn]
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