Sales of US existing homes fell to the lowest level in a year in August as low inventories left many would-be buyers unable to purchase, according to industry data released Wednesday. While Hurricane Harvey, which made landfall in southeast Texas on August 26, was blamed for some of the monthly decline, it was the second decrease in a row and the fourth in five months, the National Association of Realtors said.
Existing home sales fell 1.7 percent from July to a seasonally adjusted annual rate of 5.35 million, the NAR report said, far worse than the 0.3 percent drop analysts had forecast. The sales rate for single-family houses, townhomes, condos and co-ops was just 0.2 percent above August 2016. "Some of the South region's decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area," NAR Chief Economist Lawrence Yun said in a statement.
"Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma," he said. "However, nearly all of the lost activity will likely show up in 2018." Existing home sales in the South fell 5.7 percent from the prior month, and dropped 4.8 percent in the West, more than offsetting gains in the Midwest and Northeast.
The median home price continued its steady upward move, rising 5.6 percent compared to August 2016 to $253,500, the 66th consecutive month of year-on-year price gains. Analysts blame slow construction, as well as large private investments in rentals, for keeping home supplies low despite strong demand. Government figures released Tuesday also showed homebuilding had slowed for the second straight month.
The inventory of existing homes for sale fell 2.1 percent to 1.88 million from July, putting supplies 6.5 percent below the level of a year ago, meaning it has fallen for 27 months in a row. "We'd expect sales to fall much further in September, capturing the full effect of Harvey and Irma," Ian Shepherdson of Pantheon Macroeconomics said in a research note.
"Outside the areas affected by the hurricanes, the story isn't changing much," he added. "Sales aren't moving much but with inventory very low, prices are rising at a solid 6 percent rate, so implied real mortgage rates are negative."
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