Sales of previously occupied US homes declined in August to their slowest annual pace in more than a year as home shoppers grappled with rising mortgage rates and home prices. Existing home sales fell 2% last month from July to a seasonally adjusted annual rate of 3.98m units, the National Association of Realtors said on Thursday. This is the third straight monthly decline.
Sales also fell 1.2% compared with August last year. The latest sales tally is just shy of the 4m pace economists were expecting, according to FactSet. Home sales have been mostly hovering close to a 4m annual pace going back to 2023, far short of the historic norm that is closer to 5.2m.
The last time the annual sales pace came in below 4m was June 2025. Despite the latest pullback, existing US home sales are running 1.6% higher through the first eight months of this year than they were in the same stretch of 2025, NAR said. The housing market has been stymied in large part by rising borrowing costs, as mortgage rates have marched higher in the months since the war between the US and Iran started in late February.
Expectations of higher inflation amid surging oil prices have pushed up the long-term bond yields that lenders use as a guide to pricing home loans, driving mortgage rates higher. The average rate on the benchmark 30-year mortgage hit 6.76% this week, its highest level in more than 14 months. It briefly dipped below 6% before the war started.
Yun noted that rate could soon reach 7%, given that mortgage rates tend to follow moves in the 10-year treasury yield, which is at levels not seen since late 2023. The yield was at 4.92% on the bond market as of Thursday morning. Even as sales slowed, home prices continued to rise nationally last month.
The US median sales price increased 1.6% in August from a year earlier to $429,100, an all-time high for the month of August based on data going back to 1999, NAR said. Home prices have risen on an annual basis for 38 months in a row. The US housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows.
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