Existing home sales saw a decline of 0.7% in August, reaching a seasonally adjusted annual rate of 4.04 million, marking a 15.3% drop from the previous year.

The dip in home sales comes as median existing-home sales prices climbed 3.9% from a year ago to $407,100, marking the third consecutive month when median sales price broke the $400,000 level, according to data issued by the National Association of Realtors on Thursday.

Housing Type Breakdown: The Midwest was the only region to record an improvement in sales, whereas sales in the South and West saw a decline, and the Northeast remained unchanged. Every region observed a decline in year-over-year sales, with single-family home sales falling to an annual rate of 3.6 million in August, a decrease from both July and the previous year.

Meanwhile, condominium and co-op sales reached 440,000 units in August, a rise from July but still a decline from one year ago.

Inventory, Market Dynamics: The inventory of unsold existing homes dipped 0.9% to 1.1 million by the end of August, or 3.3 months’ supply at the present monthly sales pace.

Lawrence Yun, NAR chief economist, said: “Home prices continue to march higher despite lower home sales,” adding that to moderate home price gains, supply needs to essentially double.

Mortgage Rates, Sales Pace: Mortgage rates, as reported by Freddie Mac, were at an average of 7.18% as of Sept. 14. Properties for sale typically stayed on the market for 20 days in August. With mortgage rates elevated, there was a noticeable drop in the number of completed sales in August, which likely went under contract in June or July.

Read also: How First-Time Home Buyers Afford A House With Prices At Record Unaffordability

KB Home Earnings Insight: In the constrained market, KB Home (NYSE:KBH) reported a third-quarter sales decline of 13.9% year-over-year to $1.59 billion, albeit beating the analyst consensus estimate.

Market Outlook: The market dynamics, characterized by rising home prices, lower home sales and declining inventory levels, underline the increasing pressure within the real estate market.

NAR's Yun stressed the need to address the supply shortage to moderate the escalating home price gains.

Photo: Pixabay.