August Shows Little Change in Used Home Sales Amid Rising Mortgage Rates
In August, the sale of pre-owned homes remained virtually unchanged, with a tally of 4 million units after seasonal adjustment on an annualized basis. This figure indicates a slight decrease of 0.2% from the previous month, but an improvement of 1.8% compared to the same period one year ago. The Midwest showed the strongest sales activity, whereas the Northeast witnessed the least.
The calculations are based on finalized deals, which were predominantly signed in June and July. During these months, mortgage rates were approximately 50 basis points higher than the current rate. It's important to note that the decrease in rates that started in early September wouldn't be reflected in these figures.
Luxury Housing Sales Outperform Affordable Homes
A noticeable trend is that high-end homes are selling better than low-priced ones. For instance, sales of properties priced over $1 million surged 8% on a yearly basis, outperforming all other market segments. In stark contrast, sales of homes priced below $100,000 dipped more than 10% compared to last year.
Trade-ups from current homeowners, fueled by record-breaking housing wealth and an all-time high stock market, are primarily benefiting the luxury end of the market. However, the sale of budget-friendly homes is limited due to the shortage of available properties.
Midwest Leads in Sales, Thanks to Affordable Market Conditions
When it comes to regional performance, the Midwest took the lead in August. The region's median home prices were 22% lower than the national median price, making it an affordable market for potential homebuyers.
Housing Supply Takes a Dip
One of the most significant changes in the current housing market has been the supply. Despite a significant increase earlier this year, the supply took a hit last month, dropping 1.3% from July. However, the yearly comparison shows an overall increase of 11.7%. This decrease in supply was the first monthly drop witnessed since the beginning of this year.
As prices remain weak and mortgage rates rise, sellers are choosing to stay off the market or delay listing their properties. The supply of homes for sale in August was lean, with only a 4.6-month supply available.
Positive Territory for Prices Despite Lower Supply
The limited supply is keeping prices from plummeting. The median price of a pre-owned home sold in August was $422,600, marking a 2% increase from a year ago and representing the 26th consecutive month of annual price gains.
Longer Market Stay for Homes and Dominance of All-Cash Buyers
It's also worth noting that homes are staying on the market longer. On average, homes were listed for 31 days in August, an increase from an average of 26 days during the same month in the previous year. The percentage of first-time buyers remains historically low at 28%, and all-cash buyers continue to dominate, representing 28% of sales, a 2% rise from a year ago.
