August 2024 Existing Home Sales Pull Back

• Existing homes sales decreased by 2.5% in August to a seasonally adjusted annual rate (SAAR) of 3.86M and are now down 4.2% from August 2023, according to the National Association of Realtors (NAR).
• Total housing inventory at the end of August increased to 1.35 million units from 1.34 million units in July, up 22.7% from a year ago.
• The median existing-home sales price in August was $416,700, 3.1% higher than a year ago, down from the revised 3.9% year-over-year increase in July.

What happened: In August, existing home sales reached 3.86M seasonally adjusted annual rate, precisely in line with Zillow’s expectations based on its forecast of 3.863M ahead of this report. 

What Zillow Chief Economist Skylar Olsen thinks: 

Dropping just after the Federal Reserve’s announcement for a 50 basis Fed Fund rate cut, this month’s existing home sales reading – and the next few to come – are important tests of the market’s response to lower mortgage rates. The negative 4.2% year-over-year reading in August 2024 makes a comparison to a surprisingly strong showing of new listings and home sales late last year – then taken as a sign that owners were giving up on a near term rate cut. 

That rate cut has come, now a year later. The average mortgage rate for prime borrowers continued to fall from 6.73 at the top of August down to 6.35 by the end (according to Freddie Mac’s PMM survey) in anticipation, and the Federal Reserve certainly delivered. 

In Zillow's sales reporting, which accounts for delays in August and now September sales records in public data up to the 12th of the month, both August and September home sales indicated a stable recovery towards more typical sales volumes.

Moving ahead, the break in mortgage rates and the relatively stronger return on new listings to the market should help bring buyers back to the market during this potential sweet spot of improved affordability, less competition between buyers, and more new listings than expected in September.