US Existing Home Sales Decline to 3.98 Million Amid Rising Inventory and Mortgage Rates

The American housing market is showing signs of a complex shift as existing-home sales dropped to 3.98 million units on a seasonally adjusted annual basis in August, according to the National Association of Realtors (NAR). This represents a 2.0% decline from July and a 1.2% decrease compared to the same month last year.

Interestingly, the inventory of available homes has risen, reaching 1.62 million units—up 3.2% from July and 5.9% higher than a year ago. This marks the first time inventory has exceeded 1.6 million since November 2019, translating to a 4.9-month supply. While this is a step towards a more balanced market, which typically has about six months of supply, it still indicates that the market is not fully equilibrated.

The median price of existing homes climbed to $429,100, reflecting a 1.6% annual increase and marking the 38th consecutive month of year-over-year price growth. NAR Chief Economist Lawrence Yun noted that high mortgage rates are inversely affecting home sales, leading to a slight dip in buying activity.

Regionally, sales fell across the Northeast, Midwest, and South, while the West maintained steady sales month-over-month. Despite the monthly decline, cumulative sales through August are up 1.6% compared to the same period last year.

Wage growth of 3.1% in August and the addition of 643,000 net new jobs this year provide some financial confidence for buyers, although these factors have not sufficiently countered the pressure from elevated mortgage rates.