The market for previously owned single-family houses and condos hardly moved in August, as gradually declining mortgage rates and a healthier supply of property for sale didn't appear to have motivated many buyers.
The average rate for a 30-year, fixed-rate mortgage has been falling slowly overall since late May. The decline accelerated this month — perhaps in anticipation of the Federal Reserve’s move to cut its key interest rate — but in August, existing-home sales dipped 0.2% from one month earlier to a seasonally adjusted 4 million, the National Association of Realtors said Thursday.
"Existing home sales were little changed in August, beating expectations for a small decline, said Nancy Vanden Houten, lead US economist for Oxford Economics. "We look for sales to move mostly sideways through the end of 2025 before gradually recovering in 2026 as mortgage rates edge lower and the labor market and broader economy improve."
The number of houses for sale also fell last month by 1.3% to 1.53 million, although on a year-to-year basis, inventory was up nearly 12%. There’s now a 4.6-month supply of unsold residential property. Experts say a balanced market has a four- to six-month supply.
“I would say we still need another 300,000 additional homes. Something closer to 2 million houses for sale would be a more healthy condition,” NAR chief economist Lawrence Yun said.
Midwest and West lead the way
The bright spots in sales last month were in the more affordable Midwest, where they rose 2.1%, and in the West, which saw more modest growth (1.4%). In the pricier Northeast, sales were down 4%, and they fell 1.1% in the South. Since August 2024, sales have increased 3.2% in the Midwest and about the same in the South.
“The median home price in the Midwest is 22% below the national median,” said Yun.
The median price nationwide in August was $422,600, up 2% from a year ago. It was the 26th month in a row that prices have increased year to year. However, home price growth so far this year has been at half the pace of 2024, according to Homes.com data released earlier this month.
Some sellers who aren’t in a hurry to sell their homes are delisting them rather than accepting a price lower than what they want, Yun said. Although he doesn’t have firm data regarding delistings, he said it’s enough of a trend to have contributed to the decline in the supply of homes for sale last month.
Last year, sales of existing homes were the worst since 1995, according to NAR reports. This year won’t necessarily be much different, Yun said, even if sales pick up in the next few months due to lower mortgage rates. Year-to-date, sales are down 1.2% from last year, he said.
“Mortgage rates are clearly more favorable than they were in the early part of the year,” Yun said. “I anticipate sales will begin picking up in the upcoming months. We may be slightly above last year or slightly below, but we are essentially saying that for the past three years, we’ve had the most sluggish home sales since 1995.”