Existing home sales dipped 0.4 percent from July to August amid high mortgage rates, according to the National Association of Realtors (NAR), making it the seventh consecutive month of declining sales.
Sales are occurring at the slowest pace since June 2020, with year-over-year sales dropping by 19.9 percent.
“The softness in home sales reflects this year’s escalating mortgage rates,” NAR chief economist Lawrence Yun said in a statement. “Nonetheless, homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago.”
The average 30-year mortgage rate was 5.22 percent in August, down slightly from July but far higher than last year’s average rate of less than 3 percent, according to Freddie Mac.
Mortgage rates rose again this month with the Federal Reserve expected to raise interest rates by 75 basis points in its effort to cool inflation, making buying a home even pricier.
The median home price dipped for the second straight month from the record high in June, but prices are still up 7.7 percent from the same period last year, according to the NAR.
Prices are bolstered by a limited supply of homes. Total housing inventory stood at 1.28 million at the end of August, a 1.5 percent decrease from July.
Home builders say that higher interest rates and construction costs are making it difficult to make a profit on affordable homes, leading to a slowdown in construction that will limit supply.
“Inventory will remain tight in the coming months and even for the next couple of years,” Yun said. “Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”