The median U.S. existing-home home price dropped 1.7 percent and the sales rate dropped 12.6 percent in August compared to the same month in 2005, the National Association of Realtors trade group reported today.
Regionally, existing-home sales — including single-family houses, townhomes and condominiums — rose 1.9 percent in the Northeast to a pace of 1.07 million in August, but were 11.6 percent below August 2005. The median existing-home price in the Northeast was $271,000, down 3.9 percent from a year earlier.
Existing-home sales in the Midwest rose 0.7 percent in August to a level of 1.44 million, but were 11.1 percent lower than a year ago. The median price in the Midwest was $176,000, which is 1.1 percent below August 2005. Sales in the South slipped 0.8 percent to an annual sales rate of 2.51 million units in August, and were 7.4 percent below August 2005. The median price in the South was $184,000, down 2.6 percent from a year ago.
Existing-home sales in the West dropped 2.3 percent to an annual pace of 1.29 million in August, and were 22.8 percent lower than a year earlier. The median price in the West was $345,000, up 0.3 percent from August 2005. The seasonally adjusted annual rate of all U.S. existing home sales dropped 0.5 percent from July to August, to 6.3 million units.
This rate is a projection of a monthly sales total over a 12-month period, adjusted for seasonal fluctuations in sales activity.
David Lereah, chief economist for the Realtor group, said home sales appear to be leveling out. “After a stronger-than-expected drop in July, the fairly even sales numbers in August tell us the market is at a more sustainable pace. It keeps us on track to see the third-highest sales year on record, but we do expect an adjustment in home prices to last several months as we work through a buildup in the inventory of homes on the market.”
The national median existing-home price for all housing types was $225,000 in August, compared with $229,000 in August 2005. The median is a typical market price where half of the homes sold for more and half sold for less.
“This is the price correction we’ve been expecting — with sales stabilizing, we should go back to positive price growth early next year,” Lereah said in a statement.
Total housing inventory levels rose to 3.92 million existing homes available for sale at the end of August, which represents a 7.5-month supply at the current sales pace — the highest supply since April 1993 and a 59.6 percent rise from the for-sale supply in August 2005. A supply of six months is considered to be a rough equilibrium between a buyer’s market and a seller’s market, while a supply greater than six months is indicative of a buyer’s market.
Thomas M. Stevens, NAR president, said in a statement, “In some areas home sellers are not making sufficient adjustments in their listing price, so their homes are staying on the market and contributing to the buildup in inventory.”
He added, “Sellers are starting to become more realistic, and that could provide some lift to home sales because there is a healthy underlying demand from household growth and job creation. At the same time interest rates have moderated, so there are good opportunities for buyers in today’s market.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.52 percent in August, down from 6.76 percent in July; the rate was 5.82 percent in August 2005. Last week, the 30-year fixed dropped to 6.4 percent.
Single-family home sales held at a seasonally adjusted annual rate of 5.51 million in August, unchanged from July, but were 12.3 percent lower than the 6.28 million-unit pace in August 2005, the association reported.
Existing condo and cooperative housing sales fell 3.5 percent to a seasonally adjusted annual rate of 793,000 units in August from an upwardly revised 822,000 in July, and were 14.5 percent lower than the 928,000-unit pace in August 2005. The median existing condo price was $223,200 in August, down 2.4 percent from a year earlier.
Existing-home sales are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit, the Realtor group announced. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample — nearly 40 percent of multiple listing service data each month — and typically are not subject to large prior-month revisions.
The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns, the association noted. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.