Despite strong sales and shrinking inventory, home prices rose at the slowest pace of the year, up just 4.4 percent from last year. The average home sold for 93.8 percent of its list price, down from 94.4 percent last year, signaling that buyers’ bargaining position increased in August.
Home sales increased 14.2 percent in August from a year ago, a sizeable rebound from July’s decline. The surge was widespread, with 48 of 91 metro areas reporting double-digit increases in sales.
The boost was due in part to a calendar aberration in July that pushed out some closings into August. In addition, August 2015, when sales slid 18 percent from the previous month and grew by just 2.6 percent year over year, was the low point in an otherwise strong year for housing.
Overall home inventory continued to decline for the 11th month with an 8 percent year-over-year drop, the widest margin of 2016. After taking a step back from the market in July, sellers were active in August. New listings were up 2.4 percent, the biggest increase in five months.
The number of homes sold in the first eight months of the year, when the bulk of housing activity takes place, was 6 percent higher than the same period last year, affirming that 2016 is the best year in housing since the downturn. There would have been even more sales if inventory had been able to keep pace with ferocious buyer demand.
Yet slowing price growth also indicates that the market has shifted toward buyers’ favor heading into the fall, according to Adrian Smith, a Redfin real estate agent in Atlanta.
“Back in March, when the 2016 market really peaked, buyers were serious about moving quickly and willing to pay over list price,” said Smith. “Some sellers who waited until summer to list after watching the hot spring market, became too big for their britches.They expected top dollar, cash buyers, bidding wars and were willing to wait for the strongest offer. But late-summer buyers were even more patient and less willing to settle. There’s a big pool of buyers in the market now, but most are able and willing to wait for the right home at the right price.”
There is still enough steam from that demand for a healthy pace of sales to continue in September. Pending home sales, a forward looking indicator of sales, were up 17.3 percent year over year and up 6.4 percent month over month in August. The upshot is that the market is hitting a sweet spot in the third quarter in which there is both high buyer demand for homeowners looking to sell and cooling prices for buyers ready to purchase.
Prices
Sales
Competition
Inventory
For additional local analysis, see: Chicago, Los Angeles, San Francisco and Washington, D.C.
