Data released on Wednesday showed Existing Home Sales dropped slightly in August in line with expectation. According to analysts at Wells Fargo, the housing market still remains tight with home selling quickly. They expect the housing market to gradually move back into balance over the next year, as higher prices bring out more sellers and new home construction gradually ramps up.
“Sales of existing homes fell 2% in August to a 5.88 million-unit pace. The drop is in line with earlier reports on pending home sales (purchase contracts), which tend to lead existing home sales (closings) by 45 days to two months. Pending home sales fell 2% in June and 1.8% in July, but had surged 8.3% in May. Earlier-reported sales data from several large states also pointed to a modest drop in August.”
“The recent moderation in existing home sales reflects some easing of the buying frenzy that carried over into early 2021.”
“While home sales have moderated, the housing market remains exceptionally tight. The number of homes available for sale at the end of August totaled just 1.29 million units, which was down 1.5% from the prior month and 13.4% lower than August 2020.”
“Homes are still selling quickly. Properties typically remained on the market for just 17 days in August, the same time as July, but down from 22 days in August 2020.”
“We continue to expect the housing market to move back into balance over the next couple of years. We detect some movement on this front. The median price of an existing home has ebbed lower in each of the past two months, on a non-seasonally adjusted basis. The declines coincided with data from private companies that note a rise in the number of sellers that have reduced their asking prices in recent months. Prices are still up substantially on a year-to-year basis, but the trend in home prices is now moderating and expected to continue to do so over the next couple of years.”