US existing home sales hit weakest pace in over a year

U.S. existing home sales slowed to their weakest pace in over a year in August, with contract closings slipping 2% to an annualized rate of 3.98 million, according to data from the National Association of Realtors. This marked one of only two times since the autumn of 2024 that sales dipped below 4 million. The disappointing figures indicate a housing market in desperate need of a catalyst, as home price growth has cooled from its pandemic-era double-digit increases.

Despite a 1.6% rise in the median sales price to $429,100, affordability concerns continue to hinder buyers. Mortgage rates, now at their highest levels in over a year, also serve as a disincentive, particularly for those who refinanced a few years ago at lower costs. Lawrence Yun, NAR Chief Economist, noted that mortgage rates and home sales move in opposite directions.

However, buyers remain optimistic, citing job and wage gains supporting demand. Yun suggested mortgage rates could soon reach 7%. A positive sign for the market was the rising number of homes for sale, reaching the highest level since November 2019 at 1.62 million in August, representing 4.9 months of housing supply. The housing affordability index also improved by 3.5% year-over-year, though it remains historically depressed.

In August, sales of previously owned homes in the South dropped 1.6% to an annualized 1.84 million, the weakest in a year, while sales in the Midwest and Northeast also declined. Sales in the West remained unchanged. First-time buyers accounted for 30% of sales in August, down from 29% the previous month.