US home sales record 7th straight monthly drop

The following is an excerpt from Reuters.

U.S. existing home sales dropped for the seventh straight month in August as affordability deteriorated further amid surging mortgage rates and stubbornly high house prices, though the pace of decline moderated from prior months.

The report from the National Association of Realtors on Wednesday followed news this week that confidence among single-family homebuilders eroded for the ninth consecutive month in September, while permits for future homebuilding tumbled to the lowest level since June 2020 in August.

The Federal Reserve’s aggressive monetary policy tightening, marked by oversized interest rate increases, has weakened the housing market considerably.

Existing home sales slipped 0.4% to a seasonally adjusted annual rate of 4.80 million units last month. Discounting the plunge during the spring of 2020 when the economy was reeling from the first wave of Covid-19, this was the lowest sales level since November 2015.

Housing finance giant Fannie Mae on Wednesday lowered its forecast for total home sales this year to 5.71 million units from 5.78 million units previously.

It now expected home sales to come in at 4.98 million units in 2023, revised down from the previously estimated 5.18 million units.

“We expect the slowdown in housing to continue through 2023 as affordability constraints mount for potential homebuyers, and considering, too, that refinance activity has been significantly curtailed by the rise in mortgage rates,” said Doug Duncan, chief economist at Fannie Mae.

Though house price growth has slowed as demand weakened, tight supply is keeping prices elevated. The median existing house price increased 7.7% from a year earlier to $389,500 in August.

That was the smallest year-on-year rise since early in the pandemic. The median house price surged to a record high of $413,800 in June.

Rising mortgage rates and home prices since the start of the year have boosted monthly mortgage payments more than 50%.

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