U.S. Existing Home Sales Unexpectedly Drop 1.8% In August

(RTTNews) - After reporting four consecutive monthly increases, the National Association of Realtors released a report on Monday showing an unexpected drop in U.S. existing home sales in the month of August.

NAR said existing home sales fell 1.8 percent to a seasonally adjusted annual rate of 5.05 million in August from a downwardly revised 5.14 million in July.

The drop came as a surprise to economists, who had expected existing home sales to climb to an annual rate of 5.18 million from the 5.15 million originally reported for the previous month.

With the unexpected decrease, the annual rate of existing home sales pulled back off the ten-month high set in July.

NAR noted that sales are at the second highest pace of 2014 but remain 5.3 percent below the 5.33 million-unit level from last August, which was the second highest sales level of 2013.

Lawrence Yun, NAR chief economist, said the unexpected monthly drop in existing home sales partly reflected a marked decline in all-cash sales from investors

"On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country," Yun said.

He added, "As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying."

The report showed that the median existing-home price was $219,800 in August, down 0.8 percent from $221,600 in July but up 4.8 percent compared to $209,700 in August of 2013.

Total housing inventory fell 1.7 percent to 2.31 million existing homes available for sale at the end of August from 2.35 million at the end of July.

The number of homes available for sale represents a 5.5-month supply at the current sales pace, unchanged from the previous month.

NAR said distressed homes represented 8 percent of August sales, remaining in the single-digits for the second straight month.

Wednesday morning, the Commerce Department is scheduled to release a separate report on new home sales in the month of August.

Economists expect new home sales to climb to an annual rate of 430,000 in August after rising to a rate of 412,000 in July.