US existing home sales slide to weakest pace in more than a year

[NEW YORK] Sales of previously owned homes in the US slowed last month to their weakest pace in more than a year, as would-be buyers waited for relief on mortgage rates before purchasing.

Contract closings slipped 2 per cent to an annualised rate of 3.98 million in August, data released on Thursday (Sep 10) by the National Association of Realtors (NAR) showed. Last month marked one of only two times since the fall of 2024 that sales have dipped below 4 million.

The disappointing figures reflect a housing market in desperate need of a catalyst. Home price growth has cooled off from the pandemic era, when annual increases ran into the double digits, but affordability concerns remain a material headwind for buyers.

The median sales price rose 1.6 per cent from a year ago to US$429,100, extending a streak of annual price increases dating back to mid-2023.

Mortgage rates, now at their the highest levels in more than a year, also provide a disincentive to move, especially for people who refinanced a few years ago at borrowing costs less than half that. Nationwide, less than a quarter of outstanding mortgages have rates above 6 per cent, according to a recent housing report from Apollo Global Management.

“Mortgage rates and home sales move in opposite directions, so it’s not surprising to see a mild dip in home buying activity due to high mortgage rates,” NAR chief economist Lawrence Yun said in a statement. 

Even so, buyers are “not falling apart” amid rising mortgage rates, Yun said on a call with reporters, noting that job and wage gains are helping to support demand. Yun suggested mortgage rates could soon touch 7 per cent, however.

One positive sign for the market was the rising number of homes for sale. In August, the supply of previously owned homes on the market reached the highest level since November 2019, increasing 5.9 per cent from a year ago to 1.62 million, the NAR report showed. 

At the current sales pace, that would equate to 4.9 months of housing supply – the most in more than a decade.

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The group’s housing affordability index, which measures whether a typical family earns enough to qualify for a mortgage for a median-priced home, also improved. The gauge rose 3.5 per cent from a year ago, though remains historically depressed.

Previously owned home sales in the South, the nation’s biggest home-selling region, dropped 1.6 per cent in August to an annualised 1.84 million, the weakest in a year. Sales in the Midwest and Northeast both fell, while sales in the West were unchanged.

First-time buyers accounted for 30 per cent of sales in August, compared with 29 per cent a month earlier. BLOOMBERG