Existing-home sales stumbled in August for the fourth time in five months as strained supply levels continue to subdue overall activity. And housing starts fell for the second straight month.
Total existing-home sales of single-family homes, townhomes, condominiums and co-ops, retreated 1.7% from the month before to a seasonally adjusted annual rate of 5.35 million, according to the National Association of Realtors. Last month's sales pace is 0.2% above last August, and is the lowest since then.
The slump in existing sales stretched into August, despite what remains a solid level of demand for buying a home, said Lawrence Yun, NAR chief economist.
"Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales," he said. "What's ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it's putting on prices in several parts of the country.”
The median existing-home price for all housing types in August was $253,500, up 5.6% from August 2016, which marked the 66th straight month of year-over-year gains.
Total housing inventory at the end of August declined 2.1% to 1.88 million existing homes available for sale. That's 6.5% lower than a year ago and it has fallen year-over-year for 27 consecutive months.
Single-family home sales, the largest share of the market, decreased 2.1% to a seasonally adjusted annual rate of 4.74 million in August. But that's still 0.4% above the pace a year ago.
Existing condominium and co-op sales climbed 1.7% to a seasonally adjusted annual rate of 610,000 units in August, but are still 1.6% below a year ago.
Multi-Family Units Pull Home Starts Lower
The report follows one from a day earlier that showed nationwide housing starts fell 0.8% in August to a seasonally adjusted annual rate of 1.18 million units, according to the Commerce Department.
Single-family production rose 1.6% in August to a seasonally adjusted annual rate of 851,000 after a downwardly revised July reading. Year-to-date, single-family starts are 8.9% above their level over the same period last year. Multi-family starts dropped 6.5% to 329,000 units after an upward July revision.
“This month’s report shows that single-family starts continue to move forward at a gradual, consistent pace,” said National Association of Home Builders Chief Economist Robert Dietz. “The three-month average for single-family production has reached a post-recession high, but the months ahead may show volatility given that the building markets affected by Hurricanes Harvey and Irma represent about 14% of national production.”
Overall permit issuance in August was up 5.7% to a seasonally adjusted annual rate of 1.30 million units. Single-family permits edged down 1.5% to 800,000 units while multifamily permits rose 19.6% to 500,000.
Data for August housing starts were likely only minimally impacted by Hurricane Harvey, according to Mark Vitner, senior economist at Wells Fargo Securities. The storm hit in the last week of August and may have cut into starts in Houston, which has long been the number-one market for single-family starts and also one of the top markets for apartment construction.
“Hurricanes Harvey and Irma will also likely slow starts in coming months, as resources are redirected toward repairs and rebuilding efforts,” he said. “Texas and Florida combined account for about 25% of the nation’s single-family starts, so any production lost there is likely to weigh heavily on the national data.”
Vitner noted while single-family starts appear set to weaken, multi-family starts may be primed for a rebound.