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(CNN) -
The housing market is starting to look a little more normal.
Home sales fell in August, both from July and a year ago, breaking two consecutive months of increases, according to the National Association of Realtors (NAR).
Home buying has increased over the past year, which according to Lawrence Yun, chief economist at NAR, has been an anomaly.
The driver for these increases was pent-up demand among potential buyers that built up during lockdowns and the lifestyle changes people made during the pandemic, all while interest rates remained very low, he said.
But now the effects of those trends are fading.
"The housing sector is clearly settling down," Yun noted.
"Home sales are trying to get back to normal balance after that big spike we saw last year," he explained.
Sales of existing homes, which include single-family homes, townhouses, condos and cooperatives, fell 2% in August from July, and were down 1.5% from a year ago, according to the report.
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But sales are still above the pre-pandemic rate, Yun said.
And 2021 sales so far this year are 16% higher than in 2020 and 12% higher than in 2019.
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Home prices continue to rise
Median home prices in August were $ 356,700, up 14.9% from a year ago, marking 114 consecutive months of year-on-year home price gains.
To be clear: a price increase of 14.9% per year is not normal, according to Yun.
Around 3% to 5% is a more typical annual price increase.
But compared to the price growth of more than 20% that the NAR reported in past months, this smaller price jump shows a certain reduction in that gap.
Many home buyers are pulling out of the housing market
"Sales fell a bit in August as prices rose across the country," Yun said.
"Potential buyers are on the hunt, but much more measured in terms of their financial limits, and they just expect more inventory."
A (slightly) calmer market, but inventory is still low
Inventory remained stubbornly low in August, which continues to push sales lower at the lower end of the market, the NAR said.
"High house prices make the market unbalanced, but prices would normalize with more supply," Yun said.
The inventory of unsold homes at the end of August was 1.29 million, 1.5% less than in July and 13.4% less than last year, according to the NAR.
At the current rate of sales, the inventory of unsold homes is 2.6 months.
A balanced market has a supply of approximately six months.
But there are signs of a somewhat calmer, if not gentler, housing market looming.
"Overall, we think home sales will remain strong going into next year, but we should see inventory levels continue to slowly trend toward more normal levels and home price appreciation begins to slow over time. "said Rubén González, chief economist at Keller Williams.
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For aspiring buyers, some of the scariest parts of buying a home last spring and last fall - like waiving inspections and competition against many multiple offers and facing all-cash offers - have eased, Yun said, citing polls by NAR agents.
But a typical property continues to sell in a quick 17 days on the market, according to the report.
In August, 87% of the homes sold were on the market for less than a month.
Even when the market settles, affordability remains a challenge.
The share of first-time home buyers fell to 29% in August, the lowest rate since January 2019.
"Securing a home remains a great challenge for many potential buyers," Yun said.
"A number of potential buyers have simply paused their search, but their desire and need for a home remain," he added.
Real Estate MarketHousing