US home sales slow as mortgage rates and prices rise

Existing US home sales slowed significantly in August, reaching their lowest annual pace in over a year, according to the National Association of Realtors. The number of existing home sales fell by 2 percent from July to a seasonally adjusted annual rate of 3.98 million units, marking the third consecutive monthly decline. Sales also dropped 1.2 percent compared to August of the previous year.

This slowdown is partly attributed to rising mortgage rates and home prices, as economists predicted. Lawrence Yun, NAR's chief economist, noted that mortgage rates have been steadily increasing since February. The average rate on the 30-year mortgage hit 6.76 percent this week, the highest level in over 14 months. Yun expects rates to potentially reach 7 percent soon, given the current trends.

Despite the declining sales, home prices continued to rise nationally, with the median sales price increasing by 1.6 percent in August from a year earlier to reach an all-time high of $429,100. However, the housing market has been struggling since 2022, when mortgage rates started to rise from their pandemic-era lows. The US housing market has been in a slump, with sales of previously occupied homes essentially flat last year and at a 30-year low.

Many potential homebuyers have been priced out of the market due to years of soaring home prices and a chronic shortage of homes for sale.