Home sales fell in Au­gust as in­ven­to­ries plum­met

Daily Local News (West Chester, PA) - - BUSINESS - By Josh Boak

Amer­i­cans re­treated from home-buy­ing in Au­gust, as a wors­en­ing in­ven­tory short­age ap­pears to be hurt­ing sales and push­ing prices higher.

Hous­ing has been a bright spot amid weak eco­nomic growth for much of this year. Sales to­tals con­tinue to re­cover from the Great Re­ces­sion. Buy­ers in­creas­ingly have pris­tine credit. But the pri­mary weak­ness in hous­ing has been a lack of prop­er­ties for sale, a re­flec­tion of the lin­ger­ing dam­age caused by the hous­ing bub­ble that be­gan to burst nearly a decade ago.

Sales of ex­ist­ing homes slipped 0.9 per­cent last month to a sea­son­ally ad­justed an­nual rate of 5.33 mil­lion, the se­cond straight monthly de­cline, the Na­tional As­so­ci­a­tion of Real­tors said Thursday. The monthly set­backs hap­pened af­ter a pe­riod of steady gains that have lifted home sales up 3 per­cent so far this year. His­tor­i­cally low mort­gage rates have com­bined with an im­proved job mar­ket to bol­ster de­mand from pos­si­ble buy­ers.

But dras­ti­cally fewer sellers are com­ing into the mar­ket. The num­ber of prop­er­ties for sale is dwin­dling de­spite buyer en­thu­si­asm.

In­ven­tory has col­lapsed 10.1 per­cent from a year ago to 2.04 mil­lion homes.

“In­ven­tory woes con­tinue to in­tro­duce sup­ply grid­lock for home­buy­ers,” said Ralph McLaughlin, chief economist at the real es­tate firm Tru­lia. “Those who want to sell their home might not do so be­cause find­ing an­other home is dif­fi­cult.”

The de­crease has meant that de­mand is greater than sup­ply, prompt­ing prices to rise, bid­ding wars to erupt and many would-be buy­ers stuck in ren­tals. Those prospec­tive home­buy­ers are strug­gling to find at­trac­tive prop­er­ties in their price range and may be de­lay­ing their pur­chases.

The me­dian home sales price was $240,200 in Au­gust, a 5.1 per­cent in­crease over the past year. The in­crease means that many Amer­i­cans must save more for a down pay­ment, which has con­trib­uted to the own­er­ship rate slump­ing to a half-cen­tury low.

Sales fell in the Mid­west, South and West. Only the Northeast recorded sales gains.

Rental prices are start­ing to be­come more man­age­able af­ter sev­eral years of out­sized growth.

The real es­tate firm Zil­low re­ported Thursday that rents rose 1.7 per­cent over the past 12 months to a na­tional me­dian of $1,405 a month. A year ago, rents were climb­ing at a 6 per­cent clip.

Con­struc­tion of sin­gle­fam­ily houses has in­creased this year, but it’s done lit­tle to al­le­vi­ate the sup­ply con­straints. At the cur­rent sales pace, it would take 4.3 months to ex­haust the sup­ply of 233,000 new homes on the mar­ket. The months’ sup­ply has fallen from 5.2 months a year ago, ac­cord­ing to gov­ern­ment re­ports.

Buy­ers are get­ting some help from mort­gage rates that have stayed near his­toric lows.

Mort­gage buyer Fred­die Mac said the av­er­age 30year fixed-rate mort­gage stood at 3.48 per­cent this week, down from a 3.86 per­cent a year ago. The av­er­age rate has his­tor­i­cally been closer to six per­cent.

THE ASSOCIATED PRESS

Real es­tate agent Lauren New­man, right, pre­pares to show Steve Martin a home for sale in Mount Pleas­ant, S.C., just over the bridge from his­toric Charleston, on April 20.

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