Sales of previously-owned homes went down for the first time in four months in August, according to the National Association of Realtors. Home inventory also declined in the period.
NAR's monthly housing report showed that existing home sales fell 1.5 percent to a seasonally adjusted 5.05 million units and though the current rate is the second highest for 2014, the figure is down 5.3 percent from a year ago.
Total inventory also declined 1.7 percent in August to a seasonally adjusted 2.1 million existing units. Home prices inched up to $219,800, which is about 4.8 percent more than a year ago, the report showed.
NAR experts attribute the slump to the lack of all cash purchases. Complete cash purchases accounted for 23 percent of all the existing home sales transactions, down 6 percent from July's figures and the lowest since December 2009.
But, NAR is quick to add that this is a good sign for the housing market because all-cash purchases means less mortgage activity which automatically eliminates average-income, first-time home buyers from the housing market.
Now that wealthy investors are retreating from the market, this could make way for potential new buyers.
"There was a marked decline in all-cash sales from investors. On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country," Lawrence Yun, chief economist at NAR, explained in a statement.
"As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying," Yun added.
Yun told The Wall Street Journal that the current trend should help release some "pent-up demand" in the market from buyers who long to purchase a home through mortgages.
Other industry experts agree with Yun and assert that the fall in existing home sales and retreating all-cash investors isn't something to worry about.
"There is no fundamental economic weakness story in the fall. Maybe investors are leaving the market because home prices are too high and (there are) no more bargains to be had," Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters.
"This report indicates an orderly rotation in the distribution of the buyers' profile from investors to first-time homebuyers, which we believe is a first crucial test of the sustainability of the housing recovery," Millan Mulraine, deputy chief economist at TD Securities in New York, told the agency.
