Home Sales Slip as Buyers Reevaluate Their Home Search
September 22, 2021
Some home buyers have decided to put their search on hold as asking prices continue to increase. Existing-home sales—which reflects completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 2% on a seasonally adjusted annual rate from July to August. Sales are down 1.5% compared to a year ago, the National Association of REALTORS® reported Wednesday. All four major regions of the U.S. posted declines in existing-home sales last month.
But many home buyers are still on the hunt—and, along with price increases, they’re finding fewer home listings.
“Sales slipped a bit in August as prices rose nationwide,” said Lawrence Yun, NAR’s chief economist. “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory.”
The median existing-home price climbed nearly 15% compared to a year earlier, reaching $356,700 in August. “High home prices make for an unbalanced market, but prices would normalize with more supply,” Yun says.
Here’s a closer look at housing indicators from NAR’s August housing report:
- Housing inventory: The total housing inventory at the end of August was 1.29 million units, down 1.5% compared to July and down 13.4% from a year ago. Unsold inventory is at a 2.6-month supply at the current sales pace.
- Days on the market: Eighty-seven percent of homes sold in August were on the market for less than a month. Properties stayed on the market an average of 17 days in August, down from 22 days a year ago.
- First-time buyers: First-time buyers comprised 29% of sales in August, down from 33% in August 2020. Student loan debt is increasingly getting in the way of first-time buyers; a new study from NAR found that student debt is preventing the majority of non-owner millennials and those earning more than $100,000 from buying a home. “Securing a home is still a major challenge for many prospective buyers,” Yun said. “A number of potential buyers have merely paused their search, but their desire and need for a home remain.”
- Investors and second-home buyers: Investors and second-home buyers accounted for 15% of existing-home sales in August, up from 14% a year earlier. Investors and second-home buyers tend to make up the biggest bulk of all-cash transactions. All-cash sales comprised 22% of transactions in August, up from 18% in August 2020.
Here’s a closer look at how existing-home sales fared in August across the country:
- Northeast: Existing-home sales decreased 1.4% last month reaching an annual rate of 730,000. Sales are down 2.7% compared to a year ago. Median price: $407,800, up 16.8% from one year ago.
- Midwest: Existing-home sales dropped 1.4% in August to an annual rate of 1.37 million. Sales are 2.1% below August 2020. Median price: $272,200, a 10.5% increase from a year earlier.
- South: Existing-home sales decreased 3% in August, registering an annual rate of 2.55 million. That is down 0.8% compared to the same time a year ago. Median price: $303,200, up 12.8% from a year ago.
- West: Existing-home sales fell 0.8% to an annual rate of 1.23 million in August, down 1.6% compared to August 2020. Median price: $507,900, up 11.4% compared to a year ago.
Updated: October 27, 2021