WASHINGTON, Aug 22 — Sales of homes in the United States ticked down in July, according to industry data released today, as elevated mortgage rates and limited housing supply held buyers back.
The housing market in the world’s biggest economy has been reeling as interest rates climbed, making home owners reluctant to put their properties up for sale — having earlier locked in lower rates on their mortgages.
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Existing home sales edged down 2.2 per cent last month to an annual rate of 4.1 million, seasonally adjusted, said the National Association of Realtors (NAR).
The figure, which was below expectations, remains the lowest rate since January.
Sales have fallen 16.6 per cent from a year ago, said the association.
“Two factors are driving current sales activity — inventory availability and mortgage rates,” said NAR chief economist Lawrence Yun in a statement.
“Both have been unfavourable to buyers,” he added.
With housing inventory still 14.6 per cent lower than the same period a year ago, the median sales price for existing homes remained high as well at US$406,700 (RM1.2 million).
This was 1.9 per cent above July 2022, said NAR.
In August, US mortgage rates hit their highest level in more than two decades.
The popular 30-year fixed-rate mortgage averaged nearly 7.1 per cent as of August 17, up from the prior week according to home loan finance company Freddie Mac.
To get more buyers and sellers back into the market, mortgage rates would have to retreat, Yun noted.
“A meaningful rebound is out of the question for the foreseeable future,” said economists at Pantheon Macroeconomics in a recent report.
“The key issue in the existing home market is the disconnect between the current mortgage rate and the much lower average rate on outstanding mortgages,” Pantheon economists said.
Current rates are far above the 3.9 per cent average on outstanding mortgages, meaning people cannot move without triggering a major jump in monthly payments.
“Consequently, the only people moving house are those who are forced to, for family or work reasons,” said Pantheon Macroeconomics.
All four major US regions logged sales declines compared with a year ago, the NAR said today. — AFP
