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In August, sales of previously owned homes decreased by 2.5% compared to July, reaching a seasonally adjusted annualized rate of 3.86 million units, as reported by the National Association of Realtors. This figure was slightly below analysts’ expectations and 4.2% lower than the previous year. It marks the third consecutive month of sales below the 4 million mark on an annualized basis.

The count is based on closings of contracts likely signed in late June and July, when mortgage rates began to decrease but were not as low as they are currently. The average rate for a 30-year fixed loan was just over 7% in mid-June, gradually decreasing to 6.7% by the end of July.

Despite the disappointing sales figures in August, Lawrence Yun, NAR’s chief economist, remains optimistic about the market’s future. With lower mortgage rates and increasing inventory, there is potential for sales to rebound in the coming months. The home-buying process typically takes several months from the initial search to receiving the house keys.

The inventory of homes for sale showed a slight improvement, with 1.35 million units available by the end of August, marking a 0.7% increase from July and a 22.7% rise year over year. However, the supply remains limited, with just a 4.2-month supply, while a balanced market typically holds a 6-month supply.

Tight supply continues to put pressure on prices, with the median price of an existing home sold in August reaching $416,700, a 3.1% increase from the previous year. First-time buyers accounted for only 26% of August sales, matching an all-time low from November 2021. All-cash sales remained high at 26%.

Mortgage rates continued to decline in August and September, with the 30-year fixed rate now at 6.15%, the lowest in approximately two years.

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