Home sales in Maine ticked up in August, but not by enough to satisfy buyers, the Maine Association of Realtors said Thursday.
The median sales price - half selling for more and half that sold for less - reached $400,000, up 7.5% over a year ago and topping $399,250 in July fell from a record $406,000 in June.
Related U.S. home sales fell in August despite easing mortgage rates, more homes on the market
The sale of single-family homes was up 1.66% over August 2023. The number of homes for sale has nearly doubled since February, said Paul McKee, president of the Maine Association of Realtors. The increase in inventory fell short of fixing an imbalance between supply and demand, McKee said.
"Home sales in Maine remain healthy, though buyers are still faced with fewer properties for sale," he said.
In August, 4,964 home sales were listed and 1,535 units were sold, leaving Maine's for-sale inventory at a 3.2-month supply, unchanged from July, and well below the six-month supply that is "indicative of a more balanced market for both buyers and sellers," he said.
The National Association of Realtors reported a 3.3% decline in single-family home sales in the U.S. from August 2023 to last month, the Maine Realtors group said.
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A bright spot for home sales is in view as interest rates fall. The Federal Reserve on Wednesday reduced its key interest rate by a half-percentage point, to between 4.75% and 5%. It's still far higher than the range of 0% to 0.25% set by the Fed in March 2020 to stimulate the economy at the start of the COVID-19 pandemic.
"We're starting to see more optimistic signs for buyers with additional homes coming on the market, while mortgage interest rates are inching downward," McKee said. "Strong demand remains for the inventory we have."
As inflation soared, peaking at 9.1% in June 2022, central bankers raised interest rates to put pressure on demand and cool the economy. Lower interest rates make it easier for buyers to finance home purchases.
"Mortgage rates have already anticipated the Fed's likely path," said Lawrence Yun, chief economist at the National Association of Realtors.
As a result, the 30-year mortgage rate has fallen by 1.5% from early in the year, he said in a blog posting. "Any further decline in mortgage rates will be minimal."
Additional interest rate cuts are anticipated, but will have less of an impact on mortgage rates because large federal borrowing will leave less capital available for lending, Yun said.
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But mortgage rates that have fallen since the spring have increased the purchasing power for home buyers by around $50,000 for those with a $2,000 monthly budget for a mortgage, he said.
"Consumers who were priced out due to earlier higher mortgage rates could now be back in the market," he said.
The Federal Home Loan Mortgage Corp., or Freddie Mac, said mortgage rates are falling toward 6%, "reviving purchase and refinance demand for many consumers."
Related Federal Reserve cuts key interest rate by sizable half-point, signaling end to inflation fight
Mortgage rates do not directly follow moves by the Fed, but Wednesday's first reduction in more than four years will have an impact on the housing market, Freddie Mac said. "Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but rates will likely fall further, sparking more housing activity," it said.
The largest numbers of sales were in Cumberland County, where 924 units sold in August, up nearly 5% from the same month last year, and 667 units in York County, an increase of a fraction of 1%. Double-digit increases in the number of units sold were posted in Androscoggin, Franklin and Hancock counties.
Aroostook, Kennebec, Knox, Lincoln, Oxford and Piscataquis counties posted fewer units sold in August over the same month last year.
The highest median sales price in Maine, $592,000, was in Cumberland County, followed by $535,000 in York County.
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