existinghome sales experienced a slight dip in august marking the seventh consecutive month of declines according to the national association of realtors monthovermonth sales varied across the four major us regions as two regions recorded increases one was unchanged and the other posted a drop on a yearoveryear basis however sales fell in all regions total existinghomesales completed transactions that include singlefamily homes townhomes condominiums and coops notched a minor contraction of 04 from july to a seasonally adjusted annual rate of 480 million in august yearoveryear sales faded by 199 599 million in august 2021 “the housing sector is the most sensitive to and experiences the most immediate impacts from the federal reserve’s interest rate policy changes” said lawrence yun nar’s chief economist “the softness in home sales reflects this year’s escalating mortgage rates nonetheless homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago” the federal reserve made history today approving a third consecutive 75basispoint hike in interest rates in an aggressive move to tackle the whitehot inflation that has been plaguing the us economy according to cnn the supersized hike which was unfathomable by markets just months ago takes the central banks benchmark lending rate to a new target range of 3325 thats the highest the fed funds rate has been since the global financial crisis in 2008 zillow senior economist nicole bachaud believes discouraged buyers pulling back from the forsale market coupled with the ongoing inventory crunch caused existing home sales to plummet in july to the lowest rate in the last two years she said “buyers are feeling their wallets being squeezed by inflation from all sides and are unable to keep up with high housing costs homeowners have a hand in these declines too as very few are putting their homes on the market and giving up their low rates as a result home sales are sliding further from the 2021 peak causing inventory to begin pooling on the market and home prices to fall slightly as buyers walk away and sellers stay put” “while declining prices might sound like welcome news for priced out buyers a meaningful price drop is unlikely” said bachaud “this rebalancing is good news for buyers who can afford to stay in the market as power is slowly shifting back in their favor bidding wars are becoming a thing of the past as competition dwindles and more sellers are cutting their prices giving buyers who are able to stick around more breathing room” bachaud believes conditions aren’t likely to improve for those currently priced out anytime soon she explained “falling prices should bring demand back to the market and put pressure on prices to go right back up especially as inventory is stabilizing at a much lower level than the prepandemic norm low inventory and high demand stuck on the sidelines will remain the driving forces in this market and home sales should be expected to stay lower than in recent years – at least for the near future – as a result” total housing inventory registered at the end of august was 128 million units a decrease of 15 from july and unchanged from the previous year unsold inventory sits at a 32month supply at the current sales pace – identical to july and up from 26 months in august 2021 “inventory will remain tight in the coming months and even for the next couple of years” said yun “some homeowners are unwilling to trade up or trade down after locking in historicallylow mortgage rates in recent years increasing the need for more newhome construction to boost supply” the median existinghome price for all housing types in august was 389500 a 77 jump from august 2021 361500 as prices ascended in all regions this marks 126 consecutive months of yearoveryear increases the longestrunning streak on record however it was the second month in a row that the median sales price retracted after reaching a record high of 413800 in june the usual seasonal trend of prices declining after peaking in the early summer “the federal reserve has succeeded in reducing inflation in home prices by sending mortgage rates skyward” said holden lewis home and mortgage expert at nerdwallet “the median existing home price rose 77 in the 12 months ending in august that’s the slowest yearoveryear increase since june 2020” he added “price growth has slowed because the fed has pushed mortgage rates about three percentage points higher this year higher rates forced home shoppers to revise their price ranges lower in search of affordable monthly payments after 23 straight months of doubledigit yearoveryear price increases we’ve now seen two consecutive months of singledigit price increases” properties typically remained on the market for 16 days in august up from 14 days in july and down from 17 days in august 2021 eightyone percent of homes sold in august 2022 were on the market for less than a month ruben gonzalez chief economist for keller williams believes the federal reserve will continue to ratchet up the federal funds rate to slow inflation he said “if the reserve’s approach becomes more aggressive we will see mortgage rates increase even further” “housing made the second largest contribution to the 12month increases in the index behind energy” said gonzalez “as energy prices fall housing will remain a key contributor to inflation” rising mortgage rates have continued to slow housing market demand resulting in slowing sales and slower home price appreciation gonzalez said “we expect existing home sales to finish the year down nearly 20 percent and for the slower pace of home sales to persist into the beginning of 2023” firsttime buyers were responsible for 29 of sales in august consistent with july 2022 and august 2021 nar’s 2021 profile of home buyers and sellers – released in late 2021 – reported that the annual share of firsttime buyers was 34 allcash sales accounted for 24 of transactions in august the same share as in july but up from 22 in august 2021 individual investors or secondhome buyers who make up many cash sales purchased 16 of homes in august up from 14 in july and 15 in august 2021 distressed sales – foreclosures and short sales – represented about 1 of sales in august essentially unchanged from july 2022 and august 2021 according to freddie mac the average commitment rate for a 30year conventional fixedrate mortgage was 522 in august down from 541 in july the average commitment rate across all of 2021 was 296 “sales of existing homes continue to drop and the median price rose 77 from a year ago but today’s report has hints for better times ahead for potential home buyers” said robert frick corporate economist at navy federal credit union “sales didn’t fall as much as expected and while the median price rose yearoveryear it fell for the second time monthovermonth high mortgage rates continue to depress the market but they likely won’t last through next year hopefully the combination of more reasonablypriced homes and lower rates will jump start today’s sluggish market” neda navab compass’ president of national brokerage operations says that although home buyers and sellers that drive the housing market have taken their foot off the gas in response to changing conditions they haven’t stopped entirely by any means she said areas of the northeast and west have actually reaccelerated from a month ago “the ongoing uncertainty and volatility posed by rising interest rates high inflation and limited inventory have combined to lower the housing market’s speed limit but today’s data proves there is still some gas in the tank” said navab adding “sellers may return to the market this fall after taking a summer break – anecdotally we are already hearing this – and critically they may come back with a more realistic view on pricing as they realize the pedaltothemetal days of last summer have passed” realtorcom’s market trends report in august showed that the largest yearoveryear median list price growth occurred in miami 334 memphis 258 and milwaukee 250 phoenix reported the highest increase in the share of homes that had their prices reduced compared to last year 309 percentage points followed by austin 248 percentage points and las vegas 244 percentage points singlefamily home sales decreased to a seasonally adjusted annual rate of 428 million in august down 09 from 432 million in july and down 192 from the previous year the median existing singlefamily home price was 396300 in august up 76 from august 2021 existing condominium and coop sales were recorded at a seasonally adjusted annual rate of 520000 units in august up 4 from july and down 246 from one year ago the median existing condo price was 333700 in august an annual increase of 78 “in a sense we’re seeing a return to normalcy with the home buying process as it relates to home inspections and appraisal contingencies as those crazy bidding wars have essentially stopped” said nar president leslie rouda smith a realtor from plano texas and a broker associate at dave perrymiller real estate in dallas “in an everchanging market realtors help consumers successfully manage the complexities of buying or selling homes” existinghome sales in the northeast grew 16 from july to an annual rate of 630000 in august down 137 from august 2021 the median price in the northeast was 413200 an increase of 15 from the previous year existinghome sales in the midwest fell 33 from the prior month to an annual rate of 1160000 in august retreating 159 from august 2021 the median price in the midwest was 287900 up 66 from the previous year at an annual rate of 2130000 in august existinghome sales in the south were identical to july but down 193 from one year ago the median price in the south was 356000 an increase of 124 from august 2021 existinghome sales in the west expanded 11 compared to last month to an annual rate of 880000 in august down 29 from this time last year the median price in the west was 602900 a 71 increase from august 2021