E
xisting home sales declined 4.2% year-over-year as prices continued to rise, leaving many buyers on the sidelines. However, inventory is building, which could be a positive sign for the market in the coming months.August's existing home sales fell to a seasonally adjusted annual rate of 3.86 million, down from July and last year's numbers. The South saw the largest decline, with sales dropping 6% year-over-year and 3.9% from July. The Midwest also experienced a significant annual decrease of 5.2%, while the West and Northeast had more modest declines.Home prices remained strong, increasing 3.1% year-over-year to a median price of $416,700. This marks the 14th consecutive month of year-over-year price growth, with the Northeast seeing the largest jump at 7.7%. The West had the highest overall median price at $622,500.NAR Chief Economist Lawrence Yun believes that lower mortgage rates and increasing inventory will create a favorable environment for sales to improve in future months."The recent development of lower mortgage rates coupled with increasing inventory is a powerful combination," Yun said. "This implies home buyers are in a much-improved position to find the right home and at more favorable prices."However, the continued rise in prices may make affordability a challenge even with lower mortgage rates, according to Lisa Sturtevant, chief economist at Bright MLS."While well-priced homes will still attract a lot of buyers, sellers need to be prepared to negotiate not only on price but also on concessions," Sturtevant said.