Sales of U.S. homes rose 7.6% in August, recovering from a steep decline in July, a real estate group said. But the bounce stirred little optimism that the housing market would recover robustly this year.
August’s rebound was in line with economists’ expectations, and many analysts said they expected the market to continue to be sluggish despite record-low interest rates and high affordability. That could put pressure on prices.
The median price for a U.S. home fell 1.9% in August compared with July to $178,600, a 0.8% increase from August 2009, the National Assn. of Realtors said Thursday.
“The reality is that home buying activity is still at an incredibly low level and will only increase modestly from here,” said Paul Dales, U.S. economist with the research firm Capital Economics. “Home sales were only able to rise by this much in August because they had fallen so far in the months after the home buyer tax credit expired.”
Previously owned homes sold at a seasonally adjusted annual rate of 4.13 million units in August from an upwardly revised 3.84 million in July. That pace remains 19% below the August 2009 pace.
The market for previously owned homes fell off a cliff in July, with sales dropping 27% to the lowest level in more than a decade after the boost from the popular federal tax credit evaporated.
Sales of single-family homes, which make up the bulk of the market, rose 7.4% from July to a seasonally adjusted annual rate of 3.62 million units. That pace was still 19.2% below August 2009.
With the expiration of the credit, fewer first-time home buyers are out shopping. A survey by the real estate group found that 31% of homes in August were bought by first-time purchasers, a 38% decrease from July. Investors rose to a 21% market share in August from 19%.
Regionally, August sales rose 13.8% in the West compared with July. They were up 5.2% in the South, 5% in the Midwest and 7.9% in the Northeast.
Total housing inventory at the end of August slipped 0.6% to 3.98 million homes available for sale, representing a nearly 12-month supply at the current pace, about twice the amount that economists consider healthy.