First-time homebuyers may face less competition in the fall housing market as investors retreated from the market in August, data from the NATIONAL ASSOCIATON OF REALTORS® show.
Home sales activity in August 2014 remains stronger than earlier in the year, but fell last month as investors stepped away, says NAR Chief Economist Lawrence Yun.
“There was a marked decline in all-cash sales from investors,” says Yun. “On the positive side, first-time buyers [who rely on financing] have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”
All-cash sales were 23% of transactions in August, dropping for the second consecutive month (29% in July) and representing the lowest overall share since December 2009 (22%).
On the subject of mortgage financing, NAR President Steve Brown says that an upcoming FHA change will help lower the overall cost to buy a home with an FHA loan. Homeowners who buy a home with an FHA loan currently have to pay interest for the whole last month they have an FHA loan, even if they pay off the loan early in the month.
Starting with loans made Jan. 21, 2015, borrowers will only pay interest up until the day they pay off the loan, rather than having to pay interest for the whole month.
Existing-Home Sales
Total sales of existing single-family homes, townhomes, condominiums, and co-ops decreased 1.8% in August. And although homes were moving at the second-highest pace of 2014, the sales pace was still 5.3% below the sales rate seen last August, which was also the second-highest sales level of 2013.
Yun adds, “As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”
Median Home Price
The median existing-home price for all housing types in August was $219,800, which is 4.8% above August 2013. This marks the 30th consecutive month of year-over-year price gains.
At the end of August, there were 2.31 million existing homes for sale nationally. That’s a 5.5-month supply at the current sales pace. However, unsold inventory is 4.5% higher than a year ago, when there were 2.21 million existing homes available for sale.
Although the number of single-family homes sold slipped 1.8%, the median existing single-family home price rose to $220,600 — up 5.2% from August 2013.
Existing condominium and co-op sales declined 1.7%. The median existing condo price was $213,900 in August, which is 2.1% higher than a year ago.
Fewer Distressed Home Sales
Distressed homes — foreclosures and short sales — represented 8% of August sales, remaining in the single-digits for the second straight month and down from 12% a year ago.
Six percent of August sales were foreclosures and 2% were short sales, where the homeowners sold their home for less than they owed on their mortgage.
Foreclosures sold for an average discount of 14% below market value in August (20% in July), while short sales were discounted 10% (14% in July).
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