WASHINGTON (9/23/14)--Weak demand from investors caused home sales to decelerate in August, according to a National Association of Realtors (NAR) report published Monday.
The seasonally adjusted annualized rate of existing-home sales dropped to 5.05 million for the month, down from 5.14 million in July and 5.33 million on a year-over-year basis. The decrease, 1.8% on a monthly basis and 5.3% on a year-over-year basis, was driven by a declining overall share of investor purchases, to 12% from 16%--the lowest level since late 2009, according to
The Wall Street Journal
All-cash sales, which are often made by investors, constituted 23% of all sales in August, down from 29% in July. In August, 64% of investors bought existing homes with cash.
Sales of existing single-family homes were down to 4.46 million in August, a 1.8% decrease on a monthly basis and a 4.9% decrease on an annual basis. Condominium and co-op sales were down by a 1.7% monthly basis to 590,000--a 7.8% decrease over the previous 12 months.
Monthly increases of existing home sales in the Northeast and Midwest--by 4.7% and 2.5%--couldn't make up for declining monthly sales of 4.2% and 5.1% in the South and West, respectively. In every census region, sales fell by a year-over-year basis.
The cooling demand and its geographic disparity and the declining volume of investor purchases are being caused by a decline in the market supply of foreclosed homes (
Moody's analysts said, however, that stronger job growth and higher household income should lead to more robust demand in the near future from first-time homebuyers. NAR Chief Economist Lawrence Yun also told
The Wall Street Journal
that he believes there is "sizeable pent-up demand" in the market.
Inventory is also dropping in the short-term. The inventory of single-family homes fell to 2.31 million--a 1.7% monthly decrease--but it still is experiencing an overall 4.5% annual increase.
At the current rate of demand, it would take 5.5 months to deplete the supply of existing single-family homes for sale and 5.3 months to deplete the supply of co-op housing and condominiums on the market. The so-called inventory-to-sales ratio for single-family homes remained the same between July and August and increased by a half-month on an annual basis. The same measure for co-ops and condominiums was down by 0.3 months on a monthly basis and 0.7 months on a year-over-year basis.
Despite the year-over-year decline, Moody's analysts remain bullish. They pointed out that home sales have risen consistently over the past six months. The median sales price for a home in August was up 4.8% on an annual basis, to $219,000.
Builders, too, remain the most optimistic they have been since late 2005, according to a report published last week by the National Association of Home Builders.