Condominium sales were down 2% in August from July to a seasonally adjusted annual rate of 5.88 million units, according to the National Association of Realtors.
Sales in the first annual decline were 1.5% below August 2020. However, sales are still above pre-pandemic levels.
These numbers are a count of house closings and are based on contracts that were likely signed in June and July.
“The housing sector is clearly calming down,” said Lawrence Yun, brokers’ chief economist, who called last year’s super surge “an anomaly.”
The supply of homes for sale fell by 1.5% month on month to 1.29 million at the end of August. Compared to August 2020, inventory is down 13%, but that comparison has been shrinking steadily for several months. At the current rate of sale, there was a 2.6-month offer.
“We expect more stocks to arise, perhaps with the end of the eviction moratorium,” said Yun.
The tight supply pushed the median price of an existing home sold in August to $ 356,700, up 14.9% from August 2020. Although the growth is very large, year-on-year comparisons are weakening as sales slow.
The median is also skewed by increased activity at the higher end of the market. Sales of homes priced below $ 250,000 decreased year over year, while homes priced above $ 1 million increased 40%.
First-time buyers are clearly struggling with higher prices, dropping to just 19% of all sales, the lowest level since January 2019. Historically, first-time buyers typically make up 40% of buyers.
Yun said the market will become less competitive overall as buyer traffic decreases and the number of buyers who forego inspections, a competitive tactic, also decreases. The number of offers for a typical home is now 3.8 compared to 4.5 a month ago.
Mortgage rates started falling from 3.25% in June to a low of 2.78% of the popular 30-year rate by early August, according to Mortgage News Daily. The decline would have helped first-time buyers the most as they tend to have the least financial headroom and are the most sensitive to interest rates, but they clearly aren’t helping enough.
Newly built home sales in July, which are based on signed contracts rather than deals and therefore would be consistent with the latest existing home sales, increased slightly month on month, but were down 27% from July 2020 according to the US Census return .
Builders have raised prices to keep pace with rising costs of land, labor and materials. Recent earnings reports and projections from several of the country’s largest construction companies indicate supply chain issues that are hampering production and leading to fewer new home closings.