Existing-Home Sales Lower in August

September 22, 2014

Existing home sales dropped in August, the first slip after four consecutive months of gains. Total existing-home sales fell from 5.14 million in July to 5.05 million in August.

While the Northeast and Midwest regions of the U.S. actually experienced gains in total existing-home sales, these increases were outweighed by slipping numbers in the South and West. The Midwest experienced existing-home sales increases of 2.5 percent, and sales in the Northeast jumped 4.7 percent. Existing-home sales in the South and West declined by 4.2 percent and 5.1 percent, respectively.

Single-family home sales across the country slipped from 4.54 million in July to 4.46 million in August. Existing condo and co-op sales declined 1.7 percent between July and August, falling from 600,000 in July to 590,000 in August.

The decline in existing-home sales could be attributed to a decline in all-cash sales from investors, according to Lawrence Yun, NAR chief economist. All-cash sales made up 23 percent of transactions in August, compared to 29 percent in July, while transactions completed by individual investors dropped from 16 percent in July to 12 percent in August.

This gradual decline in investor activity could be good for the market in the long run, as it may translate to more opportunities for buyers who rely on financing for home purchases and cannot complete with all-cash sales. Though first-time buyers represented 29 percent of August’s transactions, remaining the same from July, that may change. The decrease in sales activity could also create better opportunities for first-time buyers in the near future, Yun said.

“On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding,” Yun said.

Source: "Existing-Home Sales Slightly Lose Momentum in August as Investor Activity Declines" (NAR)