"The softness in home sales reflects this year's escalating mortgage rates".
Sales of existing homes in the US recorded a seventh consecutive month of decline in August, a “minor contraction” of 0.4% that showed weakening demand amid rising rates and a growing affordability crisis.
Total existing-home sales dipped 0.4% month over month, and 19.9% year over year to a seasonally adjusted annual rate of 4.80 million, figures from the National Association of Realtors’ latest report showed.
“The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes,” said NAR chief economist Lawrence Yun. “The softness in home sales reflects this year’s escalating mortgage rates.”
Total housing inventory dropped 1.5% from July to 1.28 million units in August. Unsold inventory sits at a 3.2-month supply at the current sales pace – unchanged from July and up from 2.6 months a year ago.
“Inventory will remain tight in the coming months and even for the next couple of years,” Yun said. “Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”
For all housing types, the median existing-home price was $389,500, about 7.7% higher than last year ($361,500). According to NAR, the August price jump marks 126 consecutive months of year-over-year increases, the longest-running streak on record.
However, the median sales price retreated the second month in a row after reaching a record high of $413,800 in June – the usual seasonal trend of prices declining after peaking in the early summer.
“In a sense, we’re seeing a return to normalcy with the home buying process as it relates to home inspections and appraisal contingencies, as those crazy bidding wars have essentially stopped,” said NAR president Leslie Rouda Smith.