Existing-Home Sales Dip in August, Putting Market on Track for Worst Year in 3 Decades

Sales of previously owned homes declined slightly in August as the resale market capped off a summer of weak activity.

Existing-homes sales, which account for the vast majority of residential real estate transactions, fell 0.2% last month from July to a seasonally adjusted annual rate of 4 million, the National Association of Realtors reported on Thursday.

The August figure was up 1.8% from a year earlier, but matched the slowest sales annual rate since 1995, continuing to put the home resale market on track for one of its worst years for sales in three decades, unless activity picks up this fall.

“Home sales have been sluggish over the past few years due to elevated mortgage rates and limited inventory,” says NAR Chief Economist Lawrence Yun. “However, mortgage rates are declining and more inventory is coming to the market, which should boost sales in the coming months.”

Despite weak sales, a decline in inventory last month helped support prices, with the median sales price of existing homes sold in August rising 2% from a year earlier to $422,600.

It marked the fifth straight month that existing home prices were higher than those of newly built houses, upending longstanding trends. The median sales price of new homes was $413,500 in August, 2% less than for previously owned homes.

In a call with a reporters, Yun emphasized that the decline in new-home prices, which have been trending down since 2022, doesn't necessarily impact the equity of homeowners.

"I think new homes are partly reflecting that builders are now focused more on building smaller-size homes, and probably in cheaper areas," he said. "That does not imply that homeowners' wealth is declining."

In contrast to the weak month for existing homes, government data on Wednesday showed that sales of newly built homes surged in August, rising 21% from July and up 15% from a year ago.

However, the new home sales are based on contract signings, while existing home sales are based on closings, which reflect deals made in June and July, when mortgage rates were higher.

Mortgage rates averaged 6.59% in August, down from 6.72% in July, according to Freddie Mac. Rate have since fallen further, reaching an 11-month low of 6.26% last week.

"Despite improvement, rates are still not low enough to unlock the vast majority of homeowners, who continue to enjoy sub 6% rates, but it will help those on the margins and may lead to a more active fall home sales season," says Realtor.com® Chief Economist Danielle Hale.

Supply pulls back after rise in delistings

After rapid expansion earlier this year, the supply of existing homes for sale is starting to pull back, falling 1.3% from July to 1.53 million at the end of August.

The August figure was still up 11.7% from a year earlier and reflected a supply of 4.6 months at the current sales pace, flat from July.

The pullback in supply follows an increase in sellers quitting the market in frustration. In July (the latest month for which delisting data is available) delistings nationwide jumped 57% year over year, up from 48% in June, according to Realtor.com data.

"If they are not getting the price, or attracting the buyers from the listed price, some home sellers are simply saying, 'Okay, I'm going to just delist. I'm not in a desperate position to sell,'" Yun told journalists on a conference call.

Homes are also lingering longer on the market, with median days on market rising to 31, up from 26 a year ago.

Last month, 28% of sales were to first-time homebuyers, unchanged from July and up from 26% in August 2024.

Meanwhile, 21% of buyers were individual investors or second-home buyers, up slightly from 20% last month and 19% in August 2024.

Sales struggled the most at the lower end, with sales of homes priced below $100,000 down 10.4% from a year ago, while sales above $1 million jumped 8.2%.

“Record-high housing wealth and a record-high stock market will help current homeowners trade up and benefit the upper end of the market. However, sales of affordable homes are constrained by the lack of inventory,” says Yun.

Sales were strongest in Midwest, weakest in Northeast

Compared to July, home sales increased in the Midwest and West last month, and fell in the Northeast and South. Year-over-year, sales rose in the Midwest and South, and fell in the Northeast and West.

The Midwest has benefitted from better affordability conditions, with the median sales price in the Midwest 22% lower than the national median price.

Home prices in the Midwest registered $330,500 last month, up 4.5% from a year ago.

Median home prices were $624,300 in the West, $534,200 in the Northeast, and $364,100 in the South.

"The classic real estate mantra that real estate is local is still very true," says Hale.