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First Cut: Existing home sale rise solidly in August from July, highest since March 2018

Sales of existing homes were up 1.3% in August to 5.49 million units (SAAR) after an unrevised 5.42 million units in July and were up 2.6% compared to a year ago. The level was the highest since 5.51 million in March 2018. Declining mortgage rates deserve most of the credit for improving the pace of sales. The 30-year fixed rate was 3.62% in August, down from the recent peak of 4.87% in November 2018, and was the lowest in nearly three years. In spite of concerns about a possible recession, the strong labor market and rising incomes kept most buyers in the market. Sales of existing single-family homes were up 1.2% month-over-month and up 2.9% compared to a year ago. Multi-unit sales were up 1.7% compared to July, but flat from August 2018.

Supplies of homes for sale remained limited at 4.1 months’ in August from 4.2 in July and were a little below the 4.3 months’ of supply in August 2018.

Some of the activity was likely due to another month in which prices were down. The median price of a home slipped 0.8% to $278,200, some of which may be attributable to smaller units being sold, but some of which may be price concession on the part of sellers. The median price was 4.7% higher than a year ago, consistent with moderating upward pressure for home prices.

Sales were up in three of four regions.  There was a strong gain of 7.6% for the Northeast, and a solid one of 3.1% in the Midwest, followed by a modest increase of 0.9% in the South. Sales were down 3.4% in the West after a jump in the prior month.

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