Existing home sales fell for a seventh straight month in August as mortgage rates continued to affect transactions.
The annual rate of sales of existing homes fell to 4.8 million in August from an upwardly-revised figure of 4.82 million in July. However, this was higher than the consensus estimate of 4.7 million.
According to the National Association of Realtors, existing home sales in August were the lowest since the pandemic started. They were down 20% from the same month in 2021.
Lawrence Yun, the chief economist of the National Association of Home Builders, said that rising mortgage rates have affected the sales of existing homes. He noted that the housing sector is the most affected by the changes in the interest rate policy of the Federal Reserve.
The decline in existing home sales in August was not expected to be the last impact from rising rates. In September, the Federal Reserve indicated that it would be taking a more aggressive stance against inflation.
The average rate on a 30-year fixed mortgage last week was at 6.25%, which is the highest since October 2008. According to the Mortgage News Daily, the rate on Tuesday was at 6.47%. The daily average for the 30-year fixed rate is calculated by Mortgage News Daily.
During a call with reporters, Yun noted that the housing market could start to stabilize if the mortgage rate goes down. However, he noted that he might reduce his previous forecast for the number of home sales this year if the rate continues to rise.
The median sales price of a home in August was $389,500, which is down from an all-time high of $410,000 earlier this year. Year-over-year, the growth rate slowed to 7.7%, which is the lowest such rate since 2020.
Although it's not unusual for home prices to fall over a month during the course of the year, Yun noted that the decline in August was different from the usual. He said that the monthly decline from June to July and from July to August were unusually large.
Some homeowners may have decided not to list their homes due to rising mortgage rates. At the end of August, there were 1.28 million homes on the market, which is a decrease of 1.5% from the previous month and flat from last year.
According to Yun, some would-be home buyers are choosing to stay put instead of moving due to the rising mortgage rates. He noted that the increasing number of people who are staying put is affecting the inventory of homes. The rising mortgage rates are also contributing to the decline in existing home sales.