Existing-home sales fell for the seventh straight month in August, slipping 0.7% from July and 15.3% from a year earlier, according to the National Association of Realtors (NAR).
Soaring mortgage rates and constrained inventories pushed down sales. The 30-year-fixed-mortgage rate averaged 7.19% Thursday, up from 6.29% a year earlier, according to Freddie Mac.
Related: A new report pinpoints the best time to buy a house
And the inventory of unsold existing homes dipped 0.9% in August from July, totaling the equivalent of 3.3 months' supply at the current monthly sales pace.
Historically, six months of supply is associated with moderate price appreciation, and a lower number tends to push prices up more rapidly, according to NAR.
Sales stable but pricing ticks higher
"Home sales have been stable for several months, neither rising nor falling in any meaningful way," said NAR Chief Economist Lawrence Yun.
"Mortgage-rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run.”
As for prices, the median existing-home sales price registered $407,100 in August, up 0.1% from $406,700 in July and up 3.9% from $391,700 a year earlier. \
Demand is strong for the few homes available from those able to pay cash or to afford lofty mortgage rates.
August represented the third consecutive month in which prices surpassed $400,000.
Price Gains Have Momentum
"Home prices continue to march higher, despite lower home sales," Yun said. "Supply needs to essentially double to moderate home price gains."
Inventories are likely to remain low, as building new homes is expensive and homeowners have little incentive to sell with mortgage rates so high.
“Builder sentiment declined for the first time in several months, and construction levels have dipped to a three-year low, which could have an impact on the already low housing supply,” Freddie Mac Chief Economist Sam Khater said Thursday.
This means home prices are likely to remain high.
So if you’re looking to buy a home, you might want to stay in a rental for a while. Eventually mortgage rates will come down, though it may not be until the second half of next year. And eventually home prices will come down.
But until that happens, renting might save you money.
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