Sep 22, 2014 11:42 AM EDT
U.S. home resales unexpectedly fell in August as investors stepped away from the market, but the decline probably does not signal renewed weakness in the housing sector.
The National Association of Realtors said on Monday existing home sales dropped 1.8 percent to an annual rate of 5.05 million units. The decline followed four straight months of gains and the sales pace was still the second highest for the year.
Economists polled by Reuters had forecast sales increasing to a 5.20 million-unit pace. Compared to August last year, sales were down 5.3 percent. Sales rose in two of the four regions.
"We continue to expect the housing recovery to be sustained, and we look for the pace of sales activity to pick-up in the coming months" said Millan Mulraine, deputy chief economist at TD Securities in New York.
U.S. financial markets were little moved by the report.
Investors who have been propping up the market almost deserted it last month, accounting for only 12 percent of transactions, the smallest share since November 2009.
They are likely pulling back in anticipation of higher interest rates next year.
While first-time buyers did not step up in August, the Realtors group was optimistic that a strengthening labor market and some easing of lending practices would see their increased participation in the months ahead.
"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," said NAR chief economist Lawrence Yun.
All cash sales made up 23 percent of transactions in August, the smallest share since December 2009.
The share of first-time buyers was steady at 29 percent. A market share of 40 percent to 45 percent is considered by economists and real estate agents as ideal.
Housing is steadily regaining its footing after stagnating in the second half of 2013 as interest rates increased and prices surged against the backdrop of a dwindling supply of properties available for sale.
A survey last week showed homebuilder sentiment hit its highest level in nearly nine years in September and builders reported a sharp pick-up in buyer traffic since early summer.
The inventory of unsold homes on the market increased 4.5 percent from a year-ago to 2.31 million in August.
At August's sales pace, it would take 5.5 months to clear houses from the market, unchanged from July. A months' supply of 6 months is viewed as a healthy balance between supply and demand.
The improving supply is helping to restrain price increases. The median home price increased 4.8 percent from a year ago.
(Reporting by Lucia Mutikani; Edditing by Andrea Ricci)
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