Existing home sales dipped nationwide last month, breaking two straight months of increases, but supply is still tight and prices still high.

That’s continuing to put pressure on buyers, meaning more and more aspiring first-time homebuyers are getting priced out, the latest data suggests.

Here’s the latest on the state of the U.S. housing market:

  • Sales of previously owned homes dropped 2% in August from July to a seasonally adjusted annual rate of 5.88 million homes sold in August, according to the National Association of Realtors. Year over year, sales dropped 1.5% from 5.97 million homes sold in August 2020.
  • The total housing inventory at the end of August totaled 1.29 million units, down 1.5% from July and down 13.4% from the time last year, the association reported this week.
  • That tight supply means prices remain high. The median price for previously owned homes of all housing types was $356,700 in August, up nearly 15% from August 2020, as prices increased in all four of the U.S. major regions.
  • Last month marked 114 straight months of year-over-year price gains, the National Association of Realtors reported.
  • Housing affordability declined in July compared to a year ago. Median family income only rose by 2.35% year over year, compared to a 16.1% increase for the monthly mortgage payment, according to the National Association of Realtors.

“High home prices make for an unbalanced market,” Lawrence Yun, the association’s chief economist, said in a prepared statement, “but prices would normalize with more supply.”

But supply continues to be the problem.

  • Properties typically stayed on the market for 17 days in August, the same as in July and down from 22 days in August 2020. About 87% of homes sold in August were on the market for less than a month, according to the association.
  • Unsold homes sit at a 2.6-month supply based on the current sales pace, the same as last month but down from three months in August 2020.

So while there was a dip in home purchases, “potential buyers are out and about searching,” but they’re “much more measured about their financial limits and simply waiting for more inventory,” Yun said.

The slowing home sales follows a similar pattern Utah’s most populous county saw last month. Home sales in Salt Lake County fell 17% in August compared to August 2020, according to UtahRealEstate.com. Still, despite the slowdown, sales from January through August this year are only 3% lower than the same eight-month period in 2020, according to the Salt Lake Board of Realtors.

Is Utah’s ‘fierce’ housing market cooling? Sales are slowing, but prices are still sky high

The West, in particular, has seen a surge in home sales and price increases in a year when the pandemic threw the national housing market into upheaval, prompting many Americans to move out of big cities like San Francisco and New York in search of homes with more space at lower price points. One Utah city in particular, Heber City, ranked high on a list of 926 U.S. metro areas for the biggest net in-migration in 2020.

‘It’s insane. It’s crazy. It’s unprecedented’: Inside Utah’s place in the West’s raging housing market
Where are Americans moving to? In the West the in-migration is coming to Heber City

Why many can’t buy their first home

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First-time homebuyers, in particular, are struggling in this market.

  • New buyers accounted for only 29% of sales in August, down from 30% in July and 33% in August of 2020, according to the association. Typically, first-time homebuyers have made up about 40% of the nation’s buyers.
  • “Securing a home is still a major challenge for many prospective buyers,” Yun said. “A number of potential buyers have merely paused their search, but their desire and need for a home remain.”

Many aspiring first-time homebuyers could also be facing other pressures such as student debt.

  • A recent study by the National Association of Realtors found that student loan debt is preventing the majority of non-owning millennials and even those making over $100,000 a year from buying a home.
  • The poll found 60% of non-homeowner millennials say student loan debt is delaying their ability to buy a home.
  • According to the report, 51% of all student loan holders say their debt delayed them from purchasing a home.
  • Additionally, 36% of student loan debt holders say the debt delayed their decision to move out of a family member’s home, a percentage that rises to 52% among Black debt holders.
  • The survey also found 31% of millennials and 28% of Black student debt holders would use their additional funds to purchase a home in the future with no student loan debt.

“Housing affordability is worsening, leaving future homebuyers with student debt at a severe disadvantage,” Charlie Oppler, president of the National Association of Realtors, said in a prepared statement. “Younger Americans shouldn’t have to choose between education and homeownership, and NAR continues to pursue policies that ensure the American dream remains available and accessible for those still paying off their college education.”

Individual investors or second homebuyers, who account for many cash sales, bought 15% of homes in August, which ties with July but is up from 14% in August 2020, the association reported. Cash sales made up 22% of August’s transactions, down from 22% in July but up 18% in August 2020.

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