Sales of US existing homes slip slightly in August

WASHINGTON — Sales of previously owned US homes fell in August, according to industry data released Thursday, but lower mortgage rates and growing supply are likely to boost the industry.

Existing home sales dropped 2.5 per cent last month from July to an annual rate of 3.86 million, seasonally adjusted, said the National Association of Realtors (NAR).

This was largely in line with the 3.90 million consensus that analysts expected.

"Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months," said NAR chief economist Lawrence Yun.

He added in a statement that more inventory means homebuyers will be in a better position to find properties at favorable prices.

Homebuyers in the United States have been grappling with a sharp rise in mortgage rates after the US central bank rapidly lifted the benchmark lending rate in 2022 to tackle inflation.

But with growing expectations that the Federal Reserve was going to pivot to rate cuts after holding rates at a decades-high level for months, mortgage rates have also shifted lower.

The popular 30-year fixed-rate mortgage averaged 6.2 per cent as of September 12 according to Freddie Mac — reaching the lowest level since February 2023.

A year ago, the rate was around 7.2 per cent.

On Wednesday, the Fed kicked off a process of easing monetary policy with a bold half-percentage-point rate reduction, adding to expectations that mortgages rates would fall further.

Compared with a year ago, NAR data showed that existing home sales were 4.2 per cent down in August.

The median price increased 3.1 per cent from August 2023 to $416,700, with all four US regions seeing price jumps.

Yun told a press call on Thursday that although home sales are struggling, home prices remained high.