Existing-home sales dropped 2.7 percent from July to August, to a seasonally adjusted annual rate of 6.54 million units. August sales activity was 2.3 percent above the 6.39 million unit pace in August 2003, the National Association of Realtors reported today. The seasonally adjusted annual rate projects the monthly rate of existing-home sales over a 12-month period.
The national median existing-home price was $190,100 in August, which is down from the $191,300 median price reported in July, but up 7.3 percent from August 2003 when the median price was $177,200. The median is a typical market price where half of the homes sold for more and half sold for less.
Housing inventory levels at the end of August slipped 0.4 percent from July to a total of 2.48 million existing homes available for sale, which represents a 4.6-month supply at the current sales pace.
David Lereah, chief economist for the association, said the market is adjusting to a more sustainable pace. “Since April we’ve experienced three out of the four strongest months on record for existing-home sales, and August was the sixth highest,” he said. “We’re at a more sustainable level now, but long-term there should be some additional easing toward the end of the year. In fact, the August sales pace is close to what we project for total sales this year.”
Walt McDonald, association president and broker-owner of Walt McDonald Real Estate in Riverside, Calif., said mortgage interest rates have continued to decline. “The historically low level of mortgage interest rates has been the most pleasant surprise in the market this year,” he said. “Low debt-service costs continue to attract buyers to home investment and provide liquidity to sellers wishing to make a move.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.87 percent in August, down from 6.06 percent in July; it was 6.26 percent in August 2003.
Regionally, existing-home sales in the Northeast were unchanged in August at a sales pace of 730,000 units, and were 1.4 percent higher than a year ago. The median existing-home price in the Northeast was $218,500, up 11.3 percent from August 2003.
Home resale activity in the West eased 1.6 percent from July to an annual rate of 1.79 million units in August, but was 3.5 percent above August 2003. The median existing-home price in the West was $270,000, up 12.3 percent from a year earlier.
The existing-home sales pace in the South declined 2.9 percent in August to an annual rate of 2.69 million units, but was 5.1 percent higher than a year ago. The median price of an existing home in the South was $173,900, which was 5.5 percent higher than August 2003.
In the Midwest, existing homes were selling at an annual rate of 1.33 million units in August, down 4.3 percent from July; they were 3.6 percent below August 2003. The median price in the Midwest was $156,900, up 4.8 percent from a year ago.
Existing-home sales, which are based on transaction closings, differ from the U.S. Census Bureau’s series on new-home sales, which are based on contracts or the acceptance of a deposit. In the count of new-home sales, a house can be in any stage of construction ranging from not started to fully complete. The count of existing-home sales is based on completed transactions in which the home usually is ready for occupancy.
Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample and typically are not subject to large prior-month revisions that are fairly common in the new-home sales series.
The next existing-home sales release is scheduled at 10 a.m. EST on Oct. 25. The next national outlook release is scheduled for Nov. 5.
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