Existing home sales fell for the seventh straight month in August as rising interest rates continued to sideline potential home buyers, and prices finally begin to fall from record highs as experts predict that the long-standing affordability of homeowners will increase in the coming months. housing sector could help alleviate crisis.
Existing home sales fell 0.4% from July to a seasonally adjusted annual rate of 4.8 million in August, down from 6 million a year ago after declines in the US, according to data released Wednesday by the National Association. or Realtors.
In a statement, NAR chief economist Lawrence Yun called the housing sector “most sensitive to” the Federal Reserve’s rate hikes and said the softness of home sales reflects rising mortgage rates this year, which peaked at 6% last week and the cost of monthly payments on new mortgages by more than 55%, an average of hundreds of dollars per month.
Amid declining demand, the average existing home price has fallen from an all-time high of $413,800 in June to $389,500 in August, for a second straight month to its lowest level since March after breaking a five-month streak of gains.
The 7.7% annual increase in home prices in August was the slowest year-on-year increase since June 2020, and NAR expects the average existing home price could fall more than 5% to $380,000 by the end of this year.
Others are eyeing bigger losses: In a Wednesday note, Pantheon Macro chief economist Ian Shepherdson said he expects a “continued decline” in the sector through next spring, with prices falling as much as 20% by the middle of next year. their peak and helped rental inflation, which rose 7% year-on-year last month, in time to fall next year.
“Sales are lagging behind mortgage applications, which continue to fall and point to further significant declines,” said Shepherdson, who forecast sales will fall another 10% or so over the next two months, adding that “even that may not be the low ”, depending on what happens to mortgage interest in the coming weeks.
“Stocks will remain tight in the coming months and even years,” Yun says. “Some homeowners are unwilling to trade in or out after holding historically low mortgage rates in recent years, driving the need for more new-build homes to increase supply.”
On Wednesday, real estate broker Redfin reported that the ten regions where homes cool the fastest are almost all expensive West Coast markets, or places that attracted dozens of relocating home buyers during the pandemic and became significantly less affordable. They include San Jose, San Diego, Las Vegas, Phoenix and Denver.
“Basically, housing is in recession and everything to do with housing is now or will be in recession right now, but the rest of the economy is not in recession because a regular decline in the housing market is not enough to cover the 90% of the [gross domestic product] that’s not housing,” Shepherdson says.
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