Existing-home sales dropped in August when mortgage availability problems were peaking, according to the National Association of Realtors.
Total existing-home sales — including single-family, townhomes, condominiums and co-ops — were down 12.8 percent to a seasonally adjusted annual rate of 5.5 million units in August from a year-ago level of 6.31 million, and are 4.3 percent below the 5.75 million-unit pace in July.
Lawrence Yun, NAR senior economist, expected the decline. “The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through,” he said in a statement. “Lower sales contributed to a buildup of unsold inventory.”
Yun expects similar results for home sales in September. “Once we get through these disruptions, we’ll get a better sense of where the actual market is in late fall as conditions begin to normalize,” he said.
Total housing inventory rose 0.4 percent at the end of August to 4.58 million existing homes available for sale, which represents a 10-month supply at the current sales pace, up from a 9.5-month supply in July.
The national median existing-home price for all housing types was $224,500 in August, up 0.2 percent from August 2006 when the median was $224,000. The median is a typical market price where half of the homes sold for more and half sold for less.
Regionally, existing-home sales in the Northeast slipped 5.7 percent year-over-year in August to an annual pace of 1 million, while the region’s median price was up 3.6 percent from a year ago to $282,300.
Existing-home sales in the South dropped 12.7 percent year-over-year to a level of 2.2 million in August, and the median existing-home price slipped 0.7 percent during the period to $183,500.
In the Midwest, sales of existing homes fell 10.5 percent between August 2006 and August 2007 to an annual rate of 1.28 million, while the median price climbed 3.1 percent year-over-year to $177,100.
In the West, August’s existing-home sales dropped 21.7 percent from a year ago to a level of 1.01 million. The median price was down 3.8 percent during the period to $332,300.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.57 percent in August, down from 6.7 percent in July, but up slightly from 6.52 percent in August 2006.
Single-family home sales fell 3.8 percent to a seasonally adjusted annual rate of 4.81 million in August from a pace of 5 million in July, and are 13 percent below 5.53 million-unit level in August 2006. The median existing single-family home price was $223,900 in August, which is essentially even with a year ago.
Existing condominium and co-op sales dropped 8 percent to a seasonally adjusted annual rate of 690,000 units in August from 750,000 in July, and are 11.7 percent lower than the 781,000-unit pace a year ago. The median existing condo price was $228,500 in August, up 2.1 percent from August 2006.
According to NAR, the annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns, according to NAR. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the geographic composition of sales can distort median price data.