Existing home sales in the United States slowed for the seventh consecutive month in August, rising mortgage ratessoaring inflation and soaring house prices continued to push potential buyers out of the market.
Sales of previously owned homes fell 0.4% in August from the previous month to an annual rate of 4.80 million units, according to new data released Wednesday by the National Association of Realtors. That’s better than economists expected, according to Refinitiv. On an annual basis, home sales fell 19.9% in August.
Sales fell at the slowest pace since June 2020, when the economy was still in the grip of the COVID-19 pandemic. Other than that, this is the worst period for home sales since 2015. The last time home sales fell for seven consecutive months was between August 2013 and January 2014.
“Weak home sales reflect higher mortgage rates this year,” NAR chief economist Lawrence Yun said in a statement. “Nevertheless, homeowners are doing well with sales of distressed properties almost non-existent and house prices still higher than a year ago.”
INFLATION RISE FASTER THAN EXPECTED IN AUGUST, KEEPING PRICES VERY HIGH
There were about 1.28 million homes for sale at the end of August, according to the report, up about 2% from July and unchanged from a year ago. Despite more homes on the market, homes still sold on average in just 16 days – near a record pace. Before the pandemic, homes typically sat on the market for about a month before being sold.
At the current pace of sales, it would take about 3.2 months to deplete inventory of existing homes, down slightly from the 3.3 figure recorded in July. Experts consider six to seven months a healthy level.
The interest rate sensitive housing market has begun to calm significantly in recent months as Federal Reserve measures to tighten policy at the fastest pace in three decades. Policymakers have already raised the benchmark federal funds rate four times in a row — including two consecutive increases of 75 basis points — and are expected to approve another hike of that magnitude at the end of their meeting on Wednesday.
GET FOX BUSINESS ON THE ROAD BY CLICKING HERE
The average rate for a 30-year fixed mortgage climbed to 6.02% for the week ending September 15, according to recent data from mortgage lender Freddie Mac. This is significantly higher than just a year ago, when rates stood at 2.86%.
But even with higher interest rates putting homeownership out of reach for millions of Americans, prices are still higher than just a year ago. The median price of an existing home sold in August was $389,500, up 7.7% from the same period a year ago. This is the 126th consecutive month of year-over-year home price increases, the longest streak on record.
However, prices have fallen slightly from June’s high of $413,800 – part of a usual downward price trend after peaking in early summer.
#Existing #home #sales #fall #August #lowest #level