Sales of previously owned homes slowed in August for the second straight month as low supply puts a strain on the housing market.
Existing home sales, which are completed transactions that include single-family homes and townhomes, declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August from 5.38 million in July, the National Association of Realtors said Thursday.
{mosads}After last month’s decline, sales are at their second-lowest pace of of the year but are slightly higher than a year ago.
Despite record-low mortgage rates and steady labor market growth, higher prices and continued low inventory is stymieing potential buyers.
Only the Northeast saw a monthly increase in closings in August, where there are more homes for sale.
“There’s no question that after peaking in June, sales in a majority of the country have inched backward because inventory isn’t picking up to tame price growth and replace what’s being quickly sold,” said Lawrence Yun, NAR chief economist.
“Healthy labor markets in most the country should be creating a sustained demand for home purchases,” Yun said.
Housing inventory at the end of August fell 3.3 percent to 2.04 million homes available for sale, and is now 10.1 percent lower than a year ago.
Inventory has dropped for 15 straight months, year-over-year. Unsold homes are at a 4.6-month supply at the current sales pace, which is down from 4.7 months in July.
“Inventory woes continue to introduce supply gridlock for homebuyers,” said Ralph McLaughlin, chief economist at Trulia.
“Those who want to sell their home might not do so because finding another home is difficult. This introduces a first-mover problem into the home buying landscape,” McLaughlin said.
Rising home prices also are making purchases more difficult for many would-be buyers.
The median price for all housing types in August was $240,200, up 5.1 percent from August 2015 ($228,500). Last month’s gain was the 54th consecutive month of year-over-year increases.
And although incomes rose last year, home prices are still outpacing incomes in many metro areas because of the persistent shortage of new and existing homes for sale.
“Without more supply, the U.S. homeownership rate will remain near 50-year lows,” Yun said.
Even record-low mortgage rates can’t propel the market forward without more homes on the market.
Freddie Mac said that the rate for a 30-year mortgage held at 3.44 percent for the second consecutive month and remained at its lowest rate since January 2013.
The market’s share of first-time buyers remained steady at 31 percent in August, which is down from 32 percent both in July.
All-cash sales were 22 percent of transactions in August, up from 21 percent in July and unchanged from a year ago.
Individual investors, who account for many cash sales, purchased 13 percent of homes in August, up from 11 percent in July.
A bright spot in the report was the drop in distressed sales — foreclosures and short sales — that represented only 5 percent of sales in August, the lowest since NAR began tracking in October 2008.
Overall, single-family home sales declined 2.3 percent while condominium and co-op sales jumped 10.5 percent.
Regionally, sales in the Northeast surged 6.1 percent.
But sales fell in the other three regions — 0.8 percent in the Midwest, 2.7 percent in the South and 1.6 percent in the West.