The US housing market experienced a mixed bag in August. While new single-family home sales dropped 4.7% from July, they were still up 9.8% compared to the same period last year. This dip follows a significant jump in sales from June to July, suggesting a potential cooling off period. The decline was most pronounced in the West, with sales falling 17.8% from July to August.
The National Association of Realtors (NAR) also reported a slight dip in overall home sales, which include condominiums, townhomes, and co-ops. August sales were down 2.5% from July and 4.2% from August 2023.
Despite the recent decline, experts remain optimistic about the future of the housing market. The NAR chief economist, Lawrence Yun, pointed to the combination of lower mortgage rates and increasing inventory as a positive sign for future sales. The interest rate on a 30-year mortgage recently reached a two-year low of 6.13%, following a rate cut by the Federal Reserve. This, coupled with increased inventory, is expected to encourage more buyers to enter the market in the coming months.
The homebuilding industry has also been impacted by the recent trends. Lennar Corporation, one of the largest homebuilders, saw its stock price slip on Wednesday. Similarly, the IShares U.S. Home Construction ETF and Direxion Daily Homebuilders & Supplies Bull 3X Shares also experienced declines. However, the AdvisorShares Gerber Kawasaki ETF saw a slight increase, suggesting some continued optimism in the sector.
Overall, the August housing market data paints a complex picture. While sales have dipped in the short term, the long-term outlook appears positive, driven by falling mortgage rates and increasing inventory. The coming months will likely see a shift in buyer activity, with the potential for increased sales as more buyers enter the market.
