The Federal Reserve’s interest rate cut on Wednesday, which was larger than some people expected, couldn’t have come at a better time for the housing market.
After a modest monthly uptick in July, existing-home sales fell 2.5% in August to a seasonally adjusted annual rate of 3.86 million, according to the National Association of Realtors (NAR). That was a 4.2% decline compared to one year ago.
Sluggish sales left total housing inventory at 1.35 million, which is a month-over-month gain of 0.7%. And it’s 22.7% more than a year ago, bringing months of supply at the current sales pace to 4.2.
Despite inventory being considerably higher than last year, the median home price rose 3.1% year over year to $416,700, although that is the slowest gain since September 2023.
While the report is another disappointing one for the real estate industry, there’s good news. New-home sales — while making up a considerably smaller share of the housing market — rose sharply in July. Higher inventory levels and lower mortgage rates should provide better conditions for the market in the fall, helping both buyers and sellers who’ve been waiting on lower borrowing costs and the end of the election cycle.
“Buyers who waited may be glad that they did,” Realtor.com chief economist Danielle Hale said in a statement. “Not only have mortgage rates continued to fall into early September, but we’re also nearing a seasonal sweet spot for homebuyers, when competition usually wanes, home prices ease, and time on market tends to grow.”
Regionally, sales results weren’t much better. The Midwest fared the best with no month-over-month change, but existing-home sales there were down 5.2% from a year ago.
Sales in the Northeast dropped 2% compared to July and were unchanged from August 2023. The South experienced declines of 3.9% month over month and 6% year over year. In the West, sales fell more modestly — 2.7% from the prior month and 1.4% year over year.
“While well-priced homes will still attract a lot of buyers, sellers need to be prepared to negotiate not only on price, but also on concessions, including home inspection and appraisal contingencies, and closing cost assistance,” Bright MLS chief economist Lisa Sturtevant said in a statement.
