By Jacob Passy
The numbers: Sales of previously-owned homes jumped 1.3% in August as falling mortgage rates continued to entice consumers.
Existing-home sales occurred at a 5.49 million seasonally-adjusted annual pace in August, up from a 5.42 million rate in July, the National Association of Realtors said Thursday .
Economists polled by MarketWatch had expected the average annual rate of existing-home sales to fall to 5.39 million.
Existing-home sales increased by 2.6% year-over-year in August.
What happened: The median sales price increased 4.7% from the prior year to $278,200. The decline in mortgage rates and continued short supply of homes has buoyed home-price growth in recent weeks. The total inventory of homes on the market has fallen 2.6% year-over-year to 1.86 million.
Sales increased substantially in the Northeast, rising 7.6% from July. Sales also edged upward in the Midwest (3.1%) and the South (0.9%). The West saw a slowdown in existing-home sales, with a 3.4% drop from the prior month. Median home prices have increased since August 2018 for every region except the Northeast.
Big picture: Mortgage rates continue to be a rising tide for home sales across the country. Looking beyond August, mortgage-application data suggest that Americans may be looking to secure credit at the fastest pace since 2008 after accounting for seasonality, according to Pantheon Macroeconomics chief economist Ian Shepherdson.
“That, in turn, points to substantially higher home sales by the end of the year, provided would-be buyers’ confidence is not hit too hard by the tariffs on consumer goods and the likely sharp slowdown in payroll growth,” Shepherdson wrote.
That’s a big if. Economic concerns have yet to weigh too heavily on consumer confidence up until now. But if Americans begin to see the effect of the trade war and global economic uncertainty hit their wallet, they may grow more cautious about taking the leap with such a big purchase as a home.
Other headwinds persist for the housing market — namely the low supply of homes for sale continues to drive prices higher. Therefore, even a slight uptick in mortgage rates could cause many prospective buyers to be priced out of the market.
What they’re saying: “While it may be a good time to lock in your 30-year fixed rate, the market is still starved for inventory and it’s getting harder again for buyers to find the right home,” Skylar Olsen, Zillow’s /zigman2/quotes/205077794/composite ZG +1.35% director of economic research, said in a report Thursday morning.
“If current market conditions hold, it wouldn’t be a surprise to see home values continue to rise, but we could see a shift if consumer sentiment dips,” he said.