Sales of previously owned homes declined 2% in August from July to a seasonally adjusted annualized rate of 5.88 million units, according to the National Association of Realtors.

Sales were 1.5% lower than August 2020 for the first annual decline in 14 months. Sales, however, are still above pre-pandemic levels.

These numbers are a count of home closings and are based on contracts likely signed in June and July.

“The housing sector is clearly settling down,” said Lawrence Yun, chief economist for the Realtors, who called last year’s super surge “an anomaly.”

The supply of homes for sale fell 1.5% month to month to 1.29 million at the end of August. Compared with August 2020, inventory is down 13%, but that comparison has been steadily shrinking for several months. At the current sales pace there was a 2.6-month supply.

“We do expect more inventory coming up, maybe with the end of the eviction moratorium,” Yun said.

Tight supply pushed the median price of an existing home sold in August to $356,700, an increase of 14.9% from August of 2020. While the gain is very large, the annual comparisons are moderating as sales slow down.

The median is also being skewed by stronger activity on the higher end of the market. Sales of homes priced below $250,000 fell compared with a year ago, while sales of those priced above $1 million jumped 40%.

First-time buyers are clearly struggling with higher prices, falling to just a 29% share of all sales, the lowest since January 2019. Historically, first-time buyers usually make up 40% of buyers.

Yun said the market is becoming less competitive overall, with buyer traffic declining and the number of buyers waiving inspections, a competitive tactic, also falling. The number of offers on a typical home is now 3.8 compared with 4.5 a month ago.

Mortgage rates began falling in June from 3.25% down to a low of 2.78% on the popular 30-year fixed by the start of August, according to Mortgage News Daily. The drop would have helped first-time buyers most, as they tend to have the least wiggle room financially and are the most sensitive to interest rates, but clearly they are not helping enough.

Sales of newly built homes in July, which are based on signed contracts, not closings, and therefore would match up with the latest existing home sales numbers, rose slightly month to month but were down 27% from July 2020, according to the U.S. Census.

Builders have been raising prices to keep up with soaring costs for land, labor and materials. Recent earnings reports and guidance from several of the nation’s largest builders note supply chain issues that are hampering production and leading to fewer new home closings.

Correction: Existing home sales were 1.5% lower than August 2020 for the first annual decline in 14 months. An earlier version mischaracterized the drop. First-time buyers fell to a 29% share of all sales. An earlier version misstated the percentage.

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JP Morgan CEO Jamie Dimon looks on during the inauguration of the new French headquarters of US’ JP Morgan bank on June 29, 2021 in Paris.
Michel Euler | AFP | Getty Images

JPMorgan Chase CEO Jamie Dimon has warned investors that the Federal Reserve could still be forced into a sharp policy move next year — despite its best efforts to soothe concerns over inflation and interest rates.

Fed Chairman Jerome Powell has already suggested that the central bank could start to dial back on its pandemic-era monetary stimulus before the end of this year. He is due to outline more details later on Wednesday at the end of the Fed’s two-day policy meeting. The U.S. central bank is also due to publish its highly-anticipated inflation and interest rates forecasts.

Speaking to CNBC-TV18, Dimon said that if the U.S. continues to see inflation running hot over the next few months then the central bank could be forced to act quickly.

If inflation is so high that it causes the central bank to “jam on the brakes, pull out liquidity, then you’re going to see a huge reaction. And I’m not predicting that, but it’s possible they have to do that sometime next year,” Dimon said in an interview aired on Tuesday.

“The Fed can’t always be proactive — I mean, sometimes they’re going to have to be reactive.”

The top uncertainty for the Fed has been the path of inflation. The latest data showed U.S. consumer prices were up by 5.3% in the year to August, slightly down from the 13-year high of 5.4% in July.

Powell has argued that this spike in prices is transitory. But Dimon said that if those hot inflation figures continue into December then U.S. policymakers may have to admit that at least part of the price increases are here to stay.

“I doubt [come] December, people will say it’s all transitory when it’s now been going on for quite a while,” he told CNBC-TV18, but added that concerns would be curbed if global growth remains healthy while inflation is high.

“Inflation to me, it looks like there’s a part that’s transitory and there’s part that’s not — that’s not a disaster,” he added.

Correction: This story has been updated to remove an incorrect word in a quote by Jamie Dimon.

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