Buyers Have More Opportunity in the Shifting Housing Market
Deyan Georgiev / Adobestock
For the seventh consecutive month, existing-home sales fell, according to the National Association of Realtors (NAR). According to Lawrence Yun, chief economist for NAR, the housing sector tends to be most impacted by interest rate policy changes from the Federal Reserve. “The softness in home sales reflects this year’s escalating mortgage rates. Nonetheless,” he added, “homeowners are doing well with near-nonexistent distressed property sales and home prices still higher than a year ago.”
Home Prices Are Still Up
Every sales region across the country experienced year-over-year price increases, as the median existing-home price climbed 7.7% to $389,500. For the past 126 consecutive months, prices have climbed year over year, the longest-running streak in the NAR record books. However, for the past two months, prices have fallen after reaching a peak in June of $413,800. The average property sold in just 16 days in August, up from 14 days a month ago but down from 17 days a year ago. Of all the homes sold in August 2022, 81% were available for less than 30 days.
Fewer Homes for Sale
Though housing stock has been improving in the past months, August inventory levels declined to just 1.28 million units, down 1.5% from a month ago and unchanged from a year ago. At the current sales pace, this level of inventory would supply the market for just 3.2 months—unchanged from July but up from a 2.6-month supply in August 2021. According to Yun, inventory could remain constricted for the next few years: “Some homeowners are unwilling to trade up or trade down after locking in historically low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”
Who’s Buying Homes?
First-time buyers represented 29% of all buyers in August, a percentage unchanged from both a month and a year ago. According to the NAR “2021 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was 34%. All-cash sales were also consistent month over month, with 24% of all July and August transactions being cash sales. Many cash purchases are made by individual investors and second-home buyers; these two groups were responsible for 16% of all purchases in August. Distressed sales, meanwhile, accounted for just 1% of all sales in August, unchanged from both a month and a year ago.
Regional Sales Breakdown
Northeast - Existing-home sales annual rate of 630,000; an increase of 1.6% from July 2022 but a decrease of 13.7% from August 2021. At $413,200, the median sales price increased 1.5% from August 2021.
Midwest - Existing-home sales annual rate of 1.16 million; a decrease of 3.3% from July 2022 and 15.9% from August 2021. At $287,900, the median sales price increased 6.6% from August 2021.
South - Existing-home sales annual rate of 2.13 million; unchanged from July 2022 but a decrease of 19.3% from August 2021. At $356,000, the median sales price increased 12.4% from August 2021.
West - Existing-home sales annual rate of 880,000; an increase of 1.1% from July 2022 but a decrease of 29% from August 2021. At $602,900, the median sales price increased 7.1% from August 2021.