Existing home sales slipped in August to the lowest in two years, marking a seventh straight monthly decline, according to industry data released Wednesday showing continued slowing in the US housing market as mortgage rates surge.
Sales of all types of homes and condos fell 0.4 percent from July even while prices eased in the month, the National Association of Realtors (NAR) said.
The report comes on the same day the Federal Reserve was poised to deliver another big increase in the key interest rate, a move that will boost borrowing costs with further repercussions for the critical housing market.
"The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve's interest rate policy changes," said NAR chief economist Lawrence Yun. "The softness in home sales reflects this year's escalating mortgage rates."
The median home price fell for the second month in a row to $389,500, coming down from a record-high $413,800 in June, the report said.
The housing market soared during the pandemic as Americans, flush with savings, took advantage of bargain mortgage rates to snap up homes. But as the Federal Reserve has raised interest rates aggressively to combat scorching inflation, sales have taken a hit.
Existing home sales dropped 19.9 percent from the August 2021 level, with the most drastic declines occurring in the lowest price homes, according to NAR. The median price was still 7.7 percent above the year-ago figure.
The sales pace last month slowed to an annual rate of 4.80 million, seasonally adjusted, better than analysts forecast but still the lowest since May 2020.
Economists warn that further slowing is likely.
Last month's "marginal decline in sales does not mean that the floor has been reached. Sales lag mortgage applications, which continue to fall, pointing to further significant declines," said Ian Shepherdson of Pantheon Macroeconomics.
Mortgages costs have continued to escalate: The 30-year fixed rate jumped to 6.25 percent last week according to the Mortgage Bankers Association, the highest rate since October 2008.
Existing home sales make up 90 percent of the US real estate market.
Sales last month varied by region, with the Northeast and West recording increases, while the Midwest dropped and the South remained unchanged.