Breaking News: U.S. Existing Home Sales Fall More Than Expected in August
In a surprising turn of events, U.S. existing home sales have dropped more than expected in August. Despite a slight improvement in supply, house prices remain elevated, causing a 2.5% decrease in home sales last month to a seasonally adjusted annual rate of 3.86 million units.
Economists had predicted a lower decline to a rate of 3.90 million units, but the reality is that home resales have fallen by 4.2% on a year-on-year basis. The median existing home price has also increased by 3.1% from the previous year, reaching a record high of $416,700 in August.
The Federal Reserve recently cut interest rates by 50 basis points, which could potentially lead to further declines in mortgage rates. This could entice more homeowners to put their homes on the market, ultimately increasing supply. However, the demand might still outpace the supply, keeping house prices elevated.
Fed Chair Jerome Powell emphasized that the housing market is facing a shortage of supply, which cannot be easily fixed by the Fed. The hope is that as interest rates normalize, the housing market will also stabilize.
Despite the disappointing home sales in August, the combination of lower mortgage rates and increasing inventory could pave the way for higher sales in the coming months. At the current sales pace, it would take 4.2 months to exhaust the existing inventory of homes, up from 3.3 months a year ago.
First-time buyers accounted for 26% of sales, matching an all-time low seen in November 2021. This falls short of the 40% threshold that economists and realtors believe is necessary for a healthy housing market.
In conclusion, the housing market is facing challenges with supply and demand imbalance, but the recent developments in lower mortgage rates and increased inventory provide hope for a potential turnaround in the near future. Stay tuned for more updates on the evolving real estate landscape.