WASHINGTON–Sales of existing homes in the U.S. declined for the seventh straight month in August, as rising rates and home prices that have remained high have combined to stymie many would-be homebuyers, according to the National Association of Realtors.
Separate data show permits for future homebuilding tumbled to the lowest level since June 2020 in August, according to Reuters.
According to the Realtors group, 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, the report added.
Sales rose in the Northeast and West, but were unchanged in the densely populated South. They fell in the Midwest, which is generally considered a more affordable housing region.
What Economists Say
Economists polled by Reuters had forecast sales decreasing to a rate of 4.70 million units, according to the National Association of Realtors.
“The smaller-than-expected decline was likely the result of contracts signed in July, when mortgage rates retreated after sharp increases,” Reuters said. “They slowed further in August, which could result in home sales eking out some gains in September.”
But the outlook for the housing market remains dark. 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,” the report continued. “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.”
The Forecast
“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,” Doug Duncan, chief economist at Fannie Mae, told Reuters.
Added Nancy Vanden Houten, a U.S. economist at Oxford Economics in New York, “Home price growth is likely to continue to decelerate, but the limited supply of homes for sale will likely prevent too steep a decline.
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