US Existing Home Sales Climb Amid Tight Supply And Rising Prices
Sales of existing homes, by far the largest part of America's giant housing market, crept higher in August for the second straight month, industry figures showed Thursday.
But despite attractive mortgage rates, sales growth was constrained by tight supply and rising prices, according to the monthly report from the National Association of Realtors.
Sales of existing single-family homes, townhouses, condominiums and co-ops rose 1.3 percent over July's pace to an annual rate of 5.49 million units, surpassing expectations.
Sales rose in the Northeast, Midwest and South, but fell in the West.
The increase could support GDP growth in the third quarter after being a drag for more than a year.
"Sales are up, but inventory numbers remain low and are thereby pushing up home prices," NAR chief economist Lawrence Yun said in a statement.
"Home builders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income."
Government data released Wednesday showed a sudden surge in homebuilding but this was mainly concentrated in the erratic apartments segment of the industry.
The average interest rate for a 30-year fixed-rate mortgage fell to 3.62 percent in August from 3.77 in July.
The Federal Reserve on Wednesday announced it was decreasing benchmark lending rates, meaning mortgage rates are likely to decline further -- which would tend to boost demand are raise prices.
The median home price was $278,200, up 4.7 percent from August of last year, marking the 90th straight month of year-on-year increases.
Meanwhile, inventory fell to 1.86 million units on the market, down from 1.9 million in July -- representing a supply of 4.1 months, also down a notch from the prior month.
Tight supplies have been exacerbated in recent months by sluggish construction as a labor shortage and tariffs have raised costs for builders and created uncertainty about buyer demand.
But low unemployment and rising wages have many would-be homeowners ready to sign on the dotted line.
Ian Shepherdson of Pantheon Macroeconomics said rising mortgage demand suggested sales should continue to grow in the rest of 2019.
However, "Standing in the way of this is the modest tightening of mortgage lending standards and the impact of the trade war, which is set to crimp growth in consumers, real incomes and appears to be hitting confidence too, even before the tariffs on consumer goods hit at the retail level," he wrote in an analysis.
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