Stephanie Armour
USA Today
Joel Naroff of Naroff Economic Advisors says August’s drop in sales is not unexpected. By Phil Coale, AP
Home sales waned after growing strongly the past few months, a sign that the housing recovery is still on shaky ground.
Sales of existing homes dropped 2.7% to a seasonally adjusted annual rate of 5.1 million in August, according to a release Thursday by the National Association of Realtors (NAR). In the previous four months, sales had increased 15%.
Even so, August was still the second highest level of sales activity in nearly two years.
The decline came even though interest rates fell from 5.22% in July to 5.19% in August, according to Freddie Mac. They were at 5.04% for the week ending Sept. 24.
“It’s a little disappointing,” says Lawrence Yun, chief economist with NAR, adding that the drop in sales indicates a continued need for federal stimulus efforts. “We’re on the cusp of a self-sufficient recovery. There may still be some consumer fear, and the stimulus measure is (aimed) at changing that.”
Home prices also slid. The national median existing-home price was $177,700 in August, down 12.5% from August 2008, according to the NAR report.
Prices may be down in part because distressed homes, which includes foreclosed properties, made up about 30% of sales. Homes sold at foreclosure often go for up to 20% less than traditional homes on the market.
Joel Naroff of Naroff Economic Advisors says the drop in sales does not mean that the housing recovery is faltering. Rather, he says economic indicators often fluctuate when coming out of a downturn.
“It’s normal. The lack of reality is the expectation we can consistently get better numbers every month,” Naroff says. “We’re still moving forward.”
Inventory continues to shrink in a sign that the glut of homes on the market is starting to get bought up. The inventory at the end of August represented an 8.5-month supply, down from a 9.3-month supply in July. Unsold inventory totals are 16.4% lower than a year ago.
First-time home buyers made up about 30% of those home sales.
Existing-home sales in the Northeast declined 2.2% to an annual pace of 910,000 in August, but are 5.8% above August 2008. The median price in the Northeast was $241,100, which is 10.5% below a year ago.
Existing-home sales in the Midwest fell 6.6% in August to a level of 1.14 million but are unchanged from a year ago. The median price in the Midwest was $149,900, down 10.4% from August 2008.
In the South, existing-home sales were down 3.1% to an annual pace of 1.89 million in August but are 1.6% above August 2008. The median price in the South was $157,400, which is 11.0% below a year ago.
Existing-home sales in the West declined 2.7% to an annual rate of 1.16 million in August but are 7.4% higher than a year ago. The median price in the West was $220,500, down 12.2% from August 2008.