Home Prices Continue to Rise Despite Sales Slowdown

Housing supply “needs to essentially double to moderate home price gains,” says NAR Chief Economist Lawrence Yun.
House with stacks of money and a rising curve
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Low housing supply continues to push up home prices, and eager buyers are showing willingness to pay more. The median existing-home price for all housing types in August reached $407,100 nationwide, a nearly 4% increase compared to a year earlier, the National Association of REALTORS® reported Thursday. This also marks the third consecutive month for median sales prices to surpass $400,000. Further, all four major regions of the U.S. are reporting price increases.

“Home prices continue to march higher despite lower home sales,” says Lawrence Yun, NAR’s chief economist. “Supply needs to essentially double to moderate home price gains.”

Housing inventory at the end of August was down about 14% compared to last year’s levels, which were already historically low, according to NAR’s report. Unsold inventory is at a 3.3-month supply at the current sales pace; economists often say a five- to six-month pace reflects a more balanced market. 

The few homes that are on the market tend to sell fast. Seventy-two percent of homes sold in August were on the market for less than a month, according to NAR. Properties last month typically remained on the market for just 20 days.

Home Sales Are Moderating

Still, home sales are softening due to the limited supply. NAR reported that total existing-home sales—which reflect completed transactions for single-family homes, townhomes, condos and co-ops—dropped slightly by 0.7% in August compared to July. Sales are down 15.3% compared to last year’s brisk pace.

However, “home sales have been stable for several months, neither rising nor falling in any meaningful way,” Yun says. “Mortgage rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run. The South had a lighter decline in sales from a year ago due to greater regional job growth since coming out of the pandemic lockdown.”

Under the backdrop of higher mortgage rates, which have averaged in the 7% range for the last five weeks, all-cash sales have been rising. NAR’s report shows that all-cash sales accounted for 27% of transactions in August, up from 24% a year earlier. Individual investors and second-home buyers tend to make up the biggest bulk of cash sales. They purchased 16% of homes in August.

Regional Breakdown

Here’s a closer look at how existing-home sales fared across the country in August, according to NAR’s latest report:

  • Northeast: Sales reached an annual rate of 480,000, unchanged from July but down 22.6% compared to a year earlier. Median price: $465,700, up 5.8% from one year ago.
  • Midwest: Existing-home sales rose by 1% compared to the previous month, reaching an annual rate of 970,000. Sales are down 16.4% from the prior year. Median price: $305,300, up 6.8% from August 2022.
  • South: Sales fell 1.1% compared to July, reaching an annual rate of 1.84 million. Sales fell 12.4% from one year ago. Median price: $366,100, up 3.2% from a year earlier.
  • West: Sales dropped 2.6% compared to the previous month, reaching an annual rate of 750,000. Sales are down 15.7% from the prior year. Median price: $609,300, up 1% from August 2022.