Existing home sales in August fell to their lowest level since 2020

US existing home sales slowed for the seventh consecutive month in August Mortgage rates riseHigh inflation and rising home prices continue to drive 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 had expected, according to Refinitiv. On an annual basis, home sales fell 19.9% ​​in August.

Sales fell to the slowest pace since June 2020, when the economy was still deep in the midst of the COVID-19 pandemic. Barring 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.

“The softness in home sales reflects rising mortgage rates this year,” NAR Chief Economist Lawrence Yun said in a statement. “However, homeowners are doing well with sales no close to faltering and home prices still higher than they were a year ago.”

Inflation rose faster than expected in August, driving up prices painfully

A sale sign hangs in front of a property in Monterey Park, California on August 16, 2022. (Photo by FREDERIC J. BROWN/AFP via Getty Images/Getty Images)

There were about 1.28 million homes for sale at the end of August, according to the report, an increase of about 2% from July and unchanged from last year. Even though there are more homes on the market, homes are still sold on average in just 16 days – near a record pace. Before the pandemic, homes were usually kept on the market for about a month before being sold.

At the current pace of sales, it would take approximately 3.2 months to exhaust existing home inventory – slightly down from the 3.3 reading recorded in July. Experts view a frequency of six to seven months as a healthy level.

The interest rate-sensitive housing market has begun to cool off significantly in recent months as Federal Reserve Moves to tighten policy at the fastest pace in three decades. Policymakers have already raised the Fed’s benchmark interest rate four times in a row – including two back-to-back increases of 75 basis points – and are expected to agree to another hike of that size at the conclusion of their meeting on Wednesday.

housing market

Homes in the Harris Ranch community in Boise, Idaho, US, Friday, July 1, 2022. The housing market slowdown has ripple effects across the industry and mortgage lenders expect a business recession. (Jeremy Erickson/Bloomberg via Getty Images/Getty Images)

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average price of a Fixed 30-year mortgage It rose to 6.02% for the week ending September 15, according to recent data from mortgage lender Freddie Mac. This is much higher than it was just a year ago when rates were 2.86%.

But even with rising interest rates putting home ownership out of reach for millions of Americans, prices are still much steeper than they were just a year ago. The median price for an existing home sold in August was $389,500, down 7.7% from the same period last year. This month marks 126 consecutive year-over-year home price increases, the longest streak on record.

However, prices are down slightly from their June high of $413,800 – part of the usual trend of prices dropping after peaking in early summer.

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