The August housing market split in two, another sign of the K-shaped economy’s impact taking hold this year.
Existing-home sales fell 2 percent in August to a seasonally adjusted annual rate of 3.98 million, according to the National Association of Realtors. Sales of homes priced under $250,000 fell 10 percent from a year earlier, while sales of homes priced above $1 million rose 4 percent.
Lawrence Yun | Chief Economist at the National Association of Realtors
A K-shaped housing market takes hold
NAR Chief Economist Lawrence Yun attributed the divide to broader wealth effects on a call with reporters. Stock market gains over the past several years have been concentrated among a small share of Americans, he said, and that group’s buying power is less exposed to mortgage rates, which averaged 6.67 percent in August, according to Freddie Mac.
“It’s a K-shaped market, and a softer number tells you that the second group is still the larger one,” Kamini Lane, CEO of Coldwell Banker Realty, said in a statement. “Buyers are looking closely at the full monthly payment and deciding what they can realistically make work.”
“Buyers who aren’t especially sensitive to rates are still transacting, while rate-sensitive buyers are largely waiting for a life event to force the decision,” Lane said in the statement.
That pattern showed up in loan products, too. Buyers have shifted toward adjustable-rate mortgages this year, Lane told Inman, an option many hadn’t considered while rates sat closer to their pandemic-era lows.
Life-driven purchases, sometimes called “death and divorce” sales within the industry, made up about 30 percent of transactions in a recent study of Coldwell Banker agents, up from a traditional rate closer to 10 percent, Lane said.
Kamini Lane | Credit: Coldwell Banker Realty
More room to negotiate
Buyers also have more room to negotiate than they’ve had in years, another marker of the K-shaped housing market described in the report. Total housing inventory reached 1.62 million units in August, up 5.9 percent from a year earlier and approaching the 1.83 million units listed in August 2019, the last pre-pandemic August, Yun said. Months’ supply climbed to 4.9, the highest level NAR has reported in over a decade.
“There are now nearly five months of supply on the market, the highest level in over a decade, and sellers who have been sitting are more willing to discuss what it will take to get a deal done,” Lane said in the statement. “Fall usually brings less competition on top of that. For buyers who have been waiting on the sidelines, that combination could make this a good time to take another look at what’s available.”
Fall hasn’t slowed the market the way it once did, Lane told Inman. She traced that shift back to the pandemic, which she said reset how buyers respond to conditions. Buyers have become more reactive to mortgage rates and available inventory, and less driven by the calendar, than they were before 2020. The spring selling season is still real, she said, but it’s no longer as predictable.
NAR also studying data centers’ effect on prices
Separately from the August sales report, NAR released research this week examining whether proximity to data centers affects home values, Yun said on the call. Early findings show no measurable negative impact on prices so far.
About 2 percent of homes nationwide could sit within five miles of a data center within the next few years, Yun said, and he added that NAR plans to keep monitoring the issue as public attention to AI infrastructure grows and buyer sentiment around it potentially shifts.
Advice for agents
Lane told Inman that agents need to position themselves as trusted advisors as the market splits along these lines, and that means showing up prepared with real-time data to guide clients on pricing, buying and financing strategy.
She pointed agents toward two distinctions worth making with clients right now: The difference between a home that’s listed and one that will actually sell, and between a buyer who’s browsing and one who’s ready to transact.
