Existing-home sales ticked down in August, but economists believe sales will rise in the coming months due to lower mortgage rates and increasing inventory levels. This combination of factors is expected to shift the market in the near term, according to Lawrence Yun, chief economist for the NAR. He notes, "The homebuying process, from the initial search to getting the house keys, typically takes several months."

Climbing Inventory Means More Homes to Choose From

By the end of August, there were 1.35 million units available for sale, an impressive 22.7% increase from the same time last year. This rise in inventory suggests that homebuyers are gaining more leverage in the housing market, with more options available at favorable prices. However, Yun cautioned, "In areas where supply remains limited, like many markets in the Northeast, sellers still appear to hold the upper hand." This regional disparity in market conditions underscores the importance of understanding local trends before deciding to buy or sell a home.

Easing Prices and Mortgage Rates Offer Relief to Buyers

According to Freddie Mac, the average 30-year fixed-rate mortgage rate is below 6.5%, down from over 7.6% at the same time last year. Meanwhile, home prices continued to rise, but at a slower pace. The median existing-home price for all housing types in August was 3.1% higher than a year earlier. All regions in the U.S. reported price increases. Though the rate reductions were modest and home prices still increased, both trends are moving in a favorable direction for potential homebuyers, who could see significant savings at closing and over the life of their loans.

Changing Profile of Homebuyers

Economists have raised concerns about the declining presence of first-time buyers in the market. By the end of August, they made up just 26% of all sales, tying the record low set in late 2021. This marks a drop from the 29% share seen both a month earlier and at the same time last year. For more first-time buyers to enter the housing market, home prices will need to become more affordable, and access to credit will need to be expanded to include a broader range of potential buyers.

Regional Sales Breakdown

• Northeast: Existing-home sales annual rate of 480,000; a decrease of 2% from July 2024 but unchanged from August 2023. The median sales price of $503,200 represented a 7.7% increase from August 2023.

• Midwest: Existing-home sales annual rate of 920,000; unchanged from July 2024 but a decrease of 5.2% from August 2023. The median sales price of $315,400 represented a 3.8% increase from August 2023.

• South: Existing-home sales annual rate of 1.73 million; a decrease of 3.9% from July 2024 and 6% from August 2023. The median sales price of $367,000 represented a 1.6% increase from August 2023.

• West: Existing-home sales annual rate of 730,000; a decrease of 2.7% from July 2024 and 1.4% from August 2023. The median sales price of $622,500 represented a 2.2% increase from August 2023.