Home / Business and Economy / August Home Sales Plunge; Prices Hit Record High
August Home Sales Plunge; Prices Hit Record High
11 Sep
Summary
- Existing home sales fell 2% in August to slowest pace in over a year.
- Rising mortgage rates and prices deterred potential homebuyers significantly.
- Despite sales slump, median home price reached an all-time August high.
Sales of previously occupied U.S. homes saw a significant decline in August, reaching an annual pace not seen in over a year. This downturn is attributed to a combination of escalating mortgage rates and persistently high home prices, impacting buyer affordability.
Existing home sales dropped by 2% in August compared to July, according to the National Association of Realtors. This marks the third consecutive month of declining sales and falls just short of economists' expectations. The current sales pace is considerably lower than historical norms, with the market hovering near a 4-million annual pace since 2023.
Rising borrowing costs have been a major impediment to the housing market. Mortgage rates have climbed steadily since late February, influenced by rising long-term bond yields. The average rate for a 30-year mortgage has surpassed 6.71%, with forecasts suggesting it could soon reach 7%.
Despite the slowdown in transactions, home prices continued their upward trend. The U.S. median sales price in August increased by 1.6% from the previous year, reaching an all-time high of $429,100 for the month. Home prices have now seen year-over-year increases for 38 consecutive months.
While sales have slowed, the number of available homes for sale has increased. Inventory rose by 3.2% from July to 1.62 million unsold homes at the end of August. This marks a 5.9% increase from August of the previous year. The months' supply of homes currently stands at 4.9 months, the highest in over a decade, suggesting a market inching towards balance.
