Sales of previously occupied US homes declined in August to their slowest annual pace in more than a year as home shoppers grappled with rising mortgage rates and home prices.
Existing home sales fell ۲% last month from July to a seasonally adjusted annual rate of ۳.۹۸m units, the National Association of Realtors said on Thursday. This is the third straight monthly decline.
Sales also fell ۱.۲% compared with August last year. The latest sales tally is just shy of the ۴m pace economists were expecting, according to FactSet.
“It’s not a surprise home sales and mortgage rates move in the opposite direction and we have seen mortgage rates rising, rising, rising from February,” said Lawrence Yun, NAR’s chief economist.
Home sales have been mostly hovering close to a ۴m annual pace going back to ۲۰۲۳, far short of the historic norm that is closer to ۵.۲m. The last time the annual sales pace came in below ۴m was June ۲۰۲۵.
Despite the latest pullback, existing US home sales are running ۱.۶% higher through the first eight months of this year than they were in the same stretch of ۲۰۲۵, NAR said.
The housing market has been stymied in large part by rising borrowing costs, as mortgage rates have marched higher in the months since the war between the US and Iran started in late February. Expectations of higher inflation amid surging oil prices have pushed up the long-term bond yields that lenders use as a guide to pricing home loans, driving mortgage rates higher.
The average rate on the benchmark ۳۰-year mortgage hit ۶.۷۶% this week, its highest level in more than ۱۴ months. It briefly dipped below ۶% before the war started.
Yun noted that rate could soon reach ۷%, given that mortgage rates tend to follow moves in the ۱۰-year treasury yield, which is at levels not seen since late ۲۰۲۳. The yield was at ۴.۹۲% on the bond market as of Thursday morning.
Even as sales slowed, home prices continued to rise nationally last month. The US median sales price increased ۱.۶% in August from a year earlier to $۴۲۹,۱۰۰, an all-time high for the month of August based on data going back to ۱۹۹۹, NAR said. Home prices have risen on an annual basis for ۳۸ months in a row.
The US housing market has been in a slump since ۲۰۲۲, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied US homes were essentially flat last year, stuck at a ۳۰-year low.
Years of soaring home prices, especially in the early part of this decade when rock-bottom mortgage rates fueled a buying frenzy, have left many would-be homebuyers frozen out of the market. And a chronic shortage of homes for sale nationally, due partly to years of below-average new home construction, has helped prop up home prices even in a multi-year sales slump.
Many of the homes bought last month probably went under contract in July and June, when the average rate on a ۳۰-year mortgage ranged from ۶.۴۳% to ۶.۶۶%.
Regionally, sales fell last month from July in the north-east, midwest and south. Sales were flat in the west. Prices, meanwhile, continued to rise in the north-east faster than the rest of the country, climbing ۴.۳% from August last year amid a shortage of homes on the market relative to other regions.
The sales slowdown is leading to unsold properties sitting on the market longer, helping boost the number of available homes.
Although home inventory levels remain well below historical norms, there were ۱.۶۲m unsold homes at the end of last month, up ۳.۲% from July and up ۵.۹% from August last year, NAR said. That is still short of the roughly ۲m homes for sale that was typical before the Covid-۱۹ pandemic.
Still, August’s month-end inventory translates to a ۴.۹-months’ supply at the current sales pace. That is the highest level in over ۱۰ years. Traditionally, a four- to six-month supply is considered a balanced market between buyers and sellers.
The increase in homes for sale gives home shoppers who can afford to buy at current mortgage rates or pay all cash a wider selection and potentially more leverage in negotiating better sales terms.
In August, the national median home listing price fell ۱.۲% from a year earlier, while roughly ۲۰% of listings had their initial price lowered, according to Realtor.com.
First-time buyers accounted for ۳۰% of home purchases last month, up from ۲۹% in July and ۲۸% in August last year, NAR said. Historically, first-time buyers make up closer to ۴۰% of home sales.
Affordability remains a primary concern for home shoppers, as home prices, mortgage rates, property taxes and insurance costs are now significantly higher than a few years ago, noted Heather Long, chief economist at Navy Federal Credit Union.
The trends are also putting pressure on homeowners eager to sell.
“It’s not a good time to sell your home,” Long said. “Americans are hitting the pause button on homebuying.”
