Housing dragged against broader economic growth this summer, with the latest sales numbers Monday from the National Association of Realtors showing the first dip in sales of existing homes after four months of gains.
Existing home sales fell 1.8 percent in August, to an annualized rate of 5.05 million. Sales of single-family homes fell by the same margin and the supply of existing single-family homes held steady at 5.5 month.
“The contraction comes from a fallback in investor purchases. The share of sales to investors fell 4 percentage points in August, to 12 percent,” said Patrick Newport and Stephanie Karol, economists with IHS Global Insight, said in a note to investors. “This means that investors bought 26.3 percent fewer homes last month.”
Declining investor purchases were noted in the data on all-cash sales, which were 23 percent of all sales in August, according to the Realtors’ group. That’s the second straight month of decline and the lowest overall share of home sales since December 2009 when the financial crisis was in full bloom.
The midpoint existing-home sales price of $219,800 actually rose 5.2 percent over the same month of 2013 and the average price increasingly by a more modest 3.5 percent over the past 12 months ending in August.
On a brighter note, families are picking up the pace in their share of the home purchases, albeit not at the same rate as investors are backing off.
“Sales to families expanded 2.9 percent since July and 0.5 percent since last August, the first year-on-year expansion since October 2013,” Newport and Karol noted. “Tight credit presents an obstacle to families looking to buy homes, especially as the share of distressed sales shrinks.”
Lawrence Yun, chief economist for the Realtors’ association, was upbeat about a slow but steady improvement in home sales.
“On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country,” he said in a statement accompanying the August numbers. “As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”
Federal Reserve Chair Janet Yellen has repeatedly cited housing as a sector of the U.S. economy that is underperforming and thus holding back even stronger growth.