Sales of pre-owned homes in the United States dipped in August to the slowest annual rate in almost a year, despite mortgage rates dropping and the availability of homes on the market increasing. According to the National Association of Realtors, existing home sales dropped by 2.5% last month from July, reaching a seasonally adjusted annual rate of 3.86 million units.
Compared to August of the previous year, sales were down by 4.2%. Economists’ expectations of a 3.9 million sales pace were not met. The median sales price of homes rose by 3.1% year-over-year to $416,700, marking the 14th consecutive month of annual price increases.
Chief economist Lawrence Yun of the NAR expressed disappointment with the August home sales but remains optimistic due to lower mortgage rates and an increase in inventory, which could drive sales up in the coming months. In August, there was a higher inventory of homes available for buyers to choose from, with around 1.35 million unsold homes by the end of the month, up by 0.7% from July and 22.7% from August of the previous year.
This increase translates to a 4.2-month supply at the current sales pace, an improvement from the 3.3-month pace recorded in August the previous year. Typically, a 5- to 6-month supply is considered a balanced market between buyers and sellers. The housing market in the U.S. has been experiencing a sales slowdown since 2022 when mortgage rates started to rise from the lows seen during the pandemic.
Last year, existing home sales hit a nearly 30-year low as the average rate on a 30-year mortgage peaked at 7.79%, the highest in 23 years, as reported by Freddie Mac. Mortgage rates have been gradually decreasing since July, with the average rate on a 30-year home loan reaching 6.2% last week, the lowest level since February 2023.
