Home Sales Fall in August

Another report from the Associated Press has said August home sales were less than desirable. A shortage of inventory is hurting sales, and pushing prices higher.

The real estate industry has been one of the countries strong points despite a weak economy overall. Sales have been steadily recovering since the recession, and buyers credit is finally back to a healthy status. The main weakness in the real estate market is a lack of inventory. Not enough homes are being put on the market, which is a reflection of the aftermath of the bubble almost ten years ago.

The sale of existing homes dropped by 0.9% in August, to a seasonal adjusted yearly rate of 5.33 million; which is the second straight month in decline. The drop this moth happened after a time of respectable gains lifting home sales up by 3%. The historically low mortgage rates have teamed-up with an improved job market giving buying power to potential home buyers.

Significantly fewer sellers are entering the market despite eager buyers. Housing inventory has fallen 10.1% from this time last year, leaving the market with 2.04 million homes.

A shortage of homes has posed as a gridlock for buyers, and those who are willing to sell their homes may not be able to find another to live in right away. The demand is greater than the supply which is pushing up prices significantly. A lot of buyers are stuck in their rentals as they fight through a bidding war. If deals don’t go in their favor they are stuck where they are for now.

August’s median home sale price was $240,200, a price increase of 5.1% over the past year. This signals that American’s need to save more for a down payment, ultimately hurting home ownership rates.

The Northeast is the only region that saw record sales gains, while the Midwest, South, and West saw sales fall short.

Renting prices are supposedly becoming more manageable, but it’s still outrageous to rent just about anywhere. Zillow has reported that rents rose 1.7% during the last year, while in 2015 rent was rising at a rate of 6%.

Single family homes being built rose, but not enough to impact the shortage supply of homes. At this rate, it would take almost five months to exhaust the supply of 233,000 new homes on the market. The months’ supply has fallen from 5.2 months a year ago.

Some good news is that buyers are getting help as mortgage rates are still at historic lows. Freddie Mac said the average 30-year fixed-rate mortgage is at 3.48% for the week, which is down from 3.86% this time last year. The average rate has usually been around 6%. 

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