US existing home sales rose further in August due to near record low mortgage rates, cutting into supply and driving prices up further.
National Association of Realtors chief economist Lawrence Yun said that housing appears to be in a V-shaped recovery, with further increases likely through the end of the year as rates remain low.
Data released Tuesday by the National Association of Realtors showed that overall existing home sales rose by 2.4% to a 6.00 million annual rate in August, slightly above expectations for a 5.97 million rate. Sales jumped to an unrevised 5.86 million rate in July.
Single-family existing home sales rose by 1.7%, while condo sales were up 8.6%. While multi-family sales posted a sharper increase in the month, single-family sales posted a faster year/year rate as demand for more space continues to be seen.
The weekly Mortgage Bankers Association data continue to show mortgage rates remain near record levels, supporting home buying.
There were sales gains in all four regions of the country, led by the Northeast where sales are still catching up after the strictest lockdowns in the spring.
Inventory of homes for sales fell by 0.7% in August and was down 18.6% from its level a year ago, owing to the very brisk sales pace. Days on the market remained at a record low 22 days.
When combined with the sales gain, the month’s supply fell to 3.0 months from 3.1 months in July and 4.0 months a year ago.
Yun repeated that further increases in new home construction are needed to offset the sharp demand pace and addresses the surge in prices that is creating affordability issues for first-time buyers and others.
New home construction for single-family homes rose solidly in August, based on data released last week, which should lift the supply of new homes for sale and allow current owners to trade up and put their existing homes on the market.
The median sales price of existing home rose by 1.7% in August to a record high $310,600, up 11.4% year/year.
Existing Home Sales
Source: National Association of Realtors
Also released on Tuesday, the Philadelphia Fed’s non-manufacturing index rose to 8.0 in September from 1.6 in the previous month, while the Richmond Fed services revenue index rose to a reading of 6 from 2 in the previous month, suggesting further improvement in the services sector.
Also released, the Richmond Fed’s manufacturing index rose to 21 from 18 in August, in line with the other regional data already released.
Regional Manufacturing Surveys (sources as stated)