Existing home sales fell 2% in August to a seasonally adjusted rate of 5.88 million, according to the National Association of Realtors.

However, sales were above pre-pandemic levels. The number is based on closings that were likely signed in June and July. According to NAR Chief Economist Lawrence Yun, the housing market is “settling down.”

The supply of homes for sale fell 1.5% month to month to 1.29 million at the end of August. Compared to August 2020, home sales are down 13%, but the comparison has been shrinking for the past several months.

The current sales pace shows there is a 2.6-month supply. Yun expects more inventory coming up, possibly when the eviction moratorium ends nationwide as several states have extended the policy into 2022.

The median price of an existing home was $356,700, marking an increase of 14.9% from August 2020. Sales of homes priced below $250,000 fell compared to last year and sales for homes priced above $1 million jumped 40%.

First-time buyers only made up 19% of homes sold when usually they make up 40%, marking the lowest rate since January 2019. Yun says the market is less competitive with the average offers on a home dropping to 3.8 compared to 4.5 a month ago. 

Mortgage rates have fallen from 3.25% in June down to 2.78% on 30-year fixed mortgage rates, according to Mortgage Daily News. The drop in interest rates normally would have helped first-time buyers close on a home but that wasn't the case in August. 

Sales of newly built homes in July were down 27% compared to July 2020, according to the U.S. Census. Builders have been raising prices to keep up with the rising costs of labor, land and materials, and supply chain issues have led to fewer home closings.