The month of August resulted in the strongest sales of U.S. homes in nearly 18 months, which has eased some of the year’s previous concerns that the housing market is showing signs of normalizing after years of rapid growth in home values. This is according to analysis by reporters Will Parker and David Harrison at the Wall Street Journal.
Sales of previously-owned homes in the U.S. increased 1.3% in August when compared with figures from July, reaching a seasonally adjusted annual rate of 5.49 million, according to the National Association of Realtors (NAR). Economists surveyed by The Wall Street Journal expected sales to fall 1.1% last month, according to the outlet.
After a recorded uptick in home sales during the month of July that marked the first year-over-year increase in home sales in 17 months, a case was strengthened concerning a highly-favorable rate environment for consumers bringing more of them back into the homebuying fold. Many economists had difficulty reconciling the reason why a confluence of favorable rates, rising wages and strong employment numbers failed to bring more homebuyers into the market, the Journal writes.
“Just perhaps we may have turned a corner for good in terms of home sales, which had been underperforming in relation to jobs, mortgage rates and other factors,” said Lawrence Yun, NAR’s chief economist to the Journal.
That’s not to say that all the headwinds in front of the market have been avoided, however.
“Sales are up, but inventory numbers remain low and are thereby pushing up home prices,” said Yun in NAR’s announcement of the August increase. “Homebuilders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income.”
The price of homes available for sale also continues to rise, further complicating market conditions. August’s recorded median sales price was $278,200, a rise of 4.7% from the same point in 2018, which marked the 90th consecutive month of price increases on an annual basis, according to the Journal. Still, the number of homes available for sale fell in August, fueling a shortage that has been propping up prices, Yun said to WSJ.
Macroeconomic factors could also further complicate the housing market, particularly in terms of lingering fears of an oncoming economic slowdown, along with uncertainty that continues to swirl around the U.S. trade war with China.
However, a rise in rents across America are also showing signs of nudging some renters into finding better economic conditions by buying a home, as some mortgage payments are becoming a more favorable ongoing expense when compared with ballooning rents for some households.
Read the story at the Wall Street Journal (subscription required).