Despite low mortgage interest rates, sales of existing homes in the U.S. softened for a second consecutive month in August amid limited inventory and rising prices, the National Association of Realtors said in a report Thursday.
Existing home sales fell 0.9% from the previous month to a seasonally adjusted annual rate of 5.33 million in August. The pace of July sales was revised
lower to 5.38 million housing units from the previously reported 5.39 million.
After peaking in June, sales were at their second-lowest pace of the year in August. The decline was a surprise to many economists, given that low mortgage rates in concert with a healthy job market often lead to strong home sales during the summer months.
Mortgage rates hung near historic lows over the summer. The average rate for a 30-year, conventional, fixed-rate mortgage was 3.44% in August, on par with the average in July and at the lowest level since January 2013, according to Freddie Mac
Unemployment hovered below 5% in both July and August, U.S. Department of Labor surveys found
Economists polled by Reuters had predicted August home sales would climb 1.1% from the previous month to a 5.45 million-unit pace.
But inventory on the market in August declined 3.3% from the previous month and 10.1% from a year earlier to 2.04 million existing homes, according to NAR. The limited supply of existing homes, which typically account for about 90% of monthly sales, has fueled price increases. The median existing-home price in August was $240,200, up 5.1% from a year earlier, NAR reported
“Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines,” Lawrence Yun, NAR’s chief economist, said in a release.
The solid job market “should be creating a sustained demand for home purchases,” Yun added. But sales in “a majority of the country have inched backwards because inventory isn't picking up to tame price growth and replace what's being quickly sold.”