AUGUST HOME SALES DECLINED TO SLOWEST PACE SINCE JANUARY / THE WALL STREET JOURNAL

August Home Sales Declined to Slowest Pace Since January

Prices were up from year earlier with a limited number of houses on the market

By Nicole Friedman

Median home sale prices in Austin, Texas, fell 7% in August. PHOTO: TYLER DANE HANSEN FOR THE WALL STREET JOURNAL

Home sales declined again in August, falling to their slowest pace since January and intensifying the worst U.S. housing slump in more than a decade. 

Existing-home sales, which make up most of the housing market, decreased 0.7% in August from the prior month to a seasonally adjusted annual rate of 4.04 million, the National Association of Realtors said Thursday. 

August sales fell 15.3% from a year earlier. 

Home sales have tumbled by about 36% from January 2022, and activity could slow further in the months ahead. 

August sales reflected contracts signed earlier in the summer when borrowing rates were lower than today. 

Mortgage rates shot back above 7% last month and still hover near two-decade highs, which could prompt buyers to give up for the rest of the year. 

“Sales are struggling, home buyers are struggling,” said Lawrence Yun, NAR’s chief economist. 

Even buyers with cash are frustrated by the persistently low number of homes for sale. 

Most homeowners with mortgages have an interest rate below current levels, and they are unwilling to sell their homes and take on new mortgages at higher rates. 

Millions of Americans also bought homes during the pandemic-driven housing boom, and they don’t need to relocate again.

Only 1.1 million homes were for sale or under contract in August, the lowest level for that month in data going back to 1999. 

“There’s a bunch of people that for a long time are going to be happy where they are, which takes all those existing homes out of the pool,” said Doug Duncan, chief economist at Fannie Mae.

The lack of supply is forcing some of those still in the market to compete in bidding wars, which are pushing up home prices. 

The national median existing-home price rose 3.9% in August from a year earlier to $407,100, the fourth-highest level on record in data going back to 1999, NAR said. 

Prices aren’t adjusted for inflation.

Sales could pick up again if mortgage rates ease. 

That would likely lure back some opportunistic buyers, and certain owners who want to sell, but feel locked in by low rates, could decide to list. 

But the average 30-year fixed mortgage rate ticked higher this week to 7.19%, according to Freddie Mac. 

The Fed voted at its meeting Wednesday to hold interest rates steady, but signaled it could raise rates again later this year.

Jill and Steve Ray with their real-estate agent, Sarah Greenlee Morse. PHOTO: AMALIA CUDEIRO

Jill and Steve Ray moved from Pennsylvania to Maryland this year due to a job change. 

They had no trouble selling their Pennsylvania home but struggled to find a house in the Annapolis area that fit their desires and budget.

They started house hunting in March, and “there would be weekends where there would be nothing new for us to even go see,” Jill Ray said. 

The couple finally bought a four-bedroom home in Annapolis in July. 

“I just expected there to be more inventory,” she said.

Rising rates could also slow the new-home market, which has been stronger than expected this year but has faltered recently. 

A measure of U.S. home-builder confidence fell in September for the second straight month, the National Association of Home Builders said this week.

Housing starts, a measure of U.S. home-building, fell 11.3% in August from July, the Commerce Department said, though residential permits, which can be a bellwether for future home construction, rose 6.9%.

Existing-home sales fell the most month-over-month in the West, down 2.6%, and in the South, down 1.1%, NAR said. 

Miami median sale prices in August rose 14.6%, according to real-estate brokerage Redfin, as the South Florida market remained relatively hot. But prices fell the most in some of the housing market’s former hot spots, such as Austin, Texas, where they were down 7%, and Boise, Idaho, down 5.8%.

Housing market ‘wasn’t as cutthroat’

Jonathan Zerulik started house hunting in Dallas in 2022 but backed away from the market after losing out on offers. 

This year, he returned to the market after his rent rose by 25%. 

“I wanted to buy something so I wasn’t going to be subjected to price increases again,” he said.

After losing out on three offers to other bidders, Zerulik had an offer accepted on a two-bedroom condo for $165,000. The purchase closed in August.

Compared with last year, “it was still a competitive market, price-wise, but it also wasn’t as cutthroat and fast moving,” Zerulik said. 

“I’m happy to have found the right place.”

The share of first-time buyers in the market was 29% in August, unchanged from a year earlier. 

About 27% of August existing-home sales were purchased in cash, up from 24% in the same month a year ago, NAR said.

News Corp, owner of the Journal, also operates Realtor.com under license from NAR.