Existing home sales fell 1.8 percent in August, with a modest downward revision to the previous month’s data.
Despite the decline, underlying data suggest a continued normalization in the housing market.
Downside Surprise in Existing Sales
- Existing home sales slipped into negative territory in August, following four months of gains. Although the decline was much weaker than expected, the underlying data suggest the housing recovery is still making positive strides. Distressed sales comprised only 8 percent of the total sales compared to 12 percent one year ago. All-cash transactions fell 6 percentage points to 23 percent as investors are less active in the market.
First-Time Home Buyers Still Missing in Action
- The share of first-time homebuyers remained unchanged at 29 percent in August, but is a tad higher than its year-ago reading.
With household formations below its long-run trend and many young adults still choosing to rent, we will likely not see any meaningful increase in activity until next year. On a regional basis, sales in the South and West fell during the month. Median and average home prices moderated for the second month.