WASHINGTON (AP) -- U.S. home sales fell 1.7 percent in August, pulled down by the effects of Hurricane Harvey and a worsening shortage of available properties.
The National Association of Realtors said Wednesday that sales of existing homes sank last month to a seasonally adjusted annual rate of 5.35 million. Would-be homebuyers are being limited by a decline in the number of sales listings. The shortage has become a drag on sales and has caused prices to surge — factors that limit the strong job market's benefit to the housing industry.
"Given that job growth has been steady and demand is still strong, there remains fundamental support for the housing market," said Jennifer Lee, a senior economist at BMO Capital Markets.
But, she added, the shortage of available homes will hamper sales.
Over the past 12 months, sales have risen only 0.2 percent. Houston-area home sales have plunged 25 percent over the past year largely because of the damage from Harvey — a decrease that could linger through 2018, the Realtors said.
The median sales price has increased 5.6 percent from a year ago to $253,500.
Sales listings have tumbled 6.5 percent over the past 12 months to 1.88 million. The supply of homes for sale should continue to decline through February because the winter and fall are generally slower for home sales.
The decline in housing supply is having "ripple effects throughout the economy," said Robert Frick, an economist with Navy Federal Credit Union.
Higher housing costs mean that "many people who want a new, higher-paying job are finding that moving to a new city is too expensive," Frick said.
Because of declining supply, sales of homes that cost under $250,000 have fallen over the past year. But in a sign of the widening wealth gap, sales of homes that cost more than $500,000 have shot up by double digits.
Homes are also selling quickly because of the lack of options for buyers. The average number of days on the market was 30 in August, down from 36 a year ago.
August sales surged in the Northeast and increased modestly in the Midwest. But sales dropped sharply in the South and West.
Borrowing costs for would-be homebuyers have lessened in recent weeks, helping to preserve a degree of affordability despite the price increases.
Mortgage buyer Freddie Mac said the average 30-year fixed mortgage rate last week was 3.78 percent. This marked a steep decline from this year's peak of 4.3 percent, which was reached in March.
Rates have slipped in recent months amid signs that inflation has weakened and President Donald Trump's plans for stimulating faster economic growth have hit roadblocks.