Existing home sales fell 0.7% in August from the prior month as higher mortgage rates lead to limited supply of homes for sale.
Sales fell to an annualized rate of 4.04 million units, below the pandemic low of 4.09 million.
"Home prices continue to march higher despite lower home sales. Supply needs to essentially double to moderate home price gains," NAR economist Lawrence Yun said.
Our Chart of the Day is from the National Association of Realtors, which shows that the post-pandemic rebound of home sales has been completely wiped out amid a period of elevated mortgage rates.
Existing home sales fell 0.7% in August from the prior month to an annualized rate of 4.04 million, below economist forecasts of 4.10 million and below the pandemic-era low of 4.09 million.
The ongoing decline in US existing home sales began in 2022, when the Federal Reserve started to aggressively hike interest rates in its quest to tame inflation.
Since early 2022, total existing home sales in the US fell 36% from 6.34 million to last month's reading of 4.04 million. The decline accelerated as the average 30-year fixed mortgage rates steadily climbed above 7%, making the prospect of buying a home much less affordable.
But despite the decline in home sales, home prices are rising because of a limited supply of homes available for sale.
The National Association of Realtors said the median price of existing homes in August jumped 3.9% year over year to $407,100. Meanwhile, the inventory of unsold existing homes fell 0.9% to 1.1 million, which is equivalent to just 3.3 months of supply at the current pace of monthly home sales.
And the home price gains could keep accelerating as long as supply remains limited and buyers don't balk at too-high mortgage rates.
"Home prices continue to march higher despite lower home sales. Supply needs to essentially double to moderate home price gains," National Association of Realtors' chief economist Lawrence Yun said.
The decline in existing home sales comes as homebuilder sentiment and US housing starts continue to decline. And with no Fed interest rate cuts on the immediate horizon, these trends could continue.
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