Home sales fall in August despite decline in mortgage rates

The housing market took a slight hit as home sales fell 2.5% in August from the month prior, nearly double the 1.3% decline economists originally predicted, hitting a seasonally adjusted annual rate of 3.86 million, according to the National Association of Realtors. It is the fifth decline in six months.

Existing home sales, a key indicator of overall economic strength (which make up most of the housing market), fell 4.2%.

Despite mortgage rates falling to 6.09%, the lowest in over a year, high home prices and lower-than-normal inventory continue to deter many buyers.

Though nationally, at the end of August, there were 1.35 million homes for sale or under contract (up 0.7% from July and up 22.7% from August 2023, per NAR), buyers are waiting for the prices and rates to fall further.

The typical home sold last month was on the market for 26 days, up from 20 days last year.

Record prices
The national median existing-home price rose 3.1% from last year to $416,700, the highest for any August, though this figure is not adjusted for inflation.

Looking ahead
Further declines in mortgage rates are expected to be minimal as the mortgage market has already priced in expectations for additional rate cuts by the central bank.

Real estate professionals anticipate a potential increase in activity this fall if rates decline further.