The number of home sales across the U.S. slowed in August, the seventh straight month of sales declines.
National Association of Realtors he said On Wednesday, sales of existing homes fell to 4.8 million last month, down 0.4% from July. Home sales fell nearly 20% last year and are at their slowest annual pace since May 2020. The real estate market cooled as doubled their level in January.
The average rate on a 30-year home loan rose to 6.02% last week, moving above 6% for the first time since 2008, according to mortgage buyer Freddie Mac. Every percentage point increase in mortgage rates adds upon monthly payments. The jump in rates means the typical home buyer will pay up to for a 30-year mortgage.
“The rise in mortgage rates has clearly hampered the housing market,” said NAR Chief Economist Lawrence Yun.
In its ongoing fight against inflation, the Federal Reserve on Wednesday— fifth trip this year. But the latest increase in the fed funds rate is unlikely to affect mortgage rates in the near term, as current borrowing costs have already “fed in” the Fed’s three-quarters of a point price, Redfin Chief Economist Daryl Fairweather told CBS MoneyWatch.
However, economists expect home sales to continue to decline until the end of this year, noting that prices remain higher than a year ago. The national median home price in August was $389,500, up 7.7% from a year ago, according to the NAR.
Higher home prices and interest rates have pushed mortgage payments on a typical home from $897 to $1,643 a month, an 83% increase over the past three years, according to Zillow.
“Now that the market is cooling, there is less competition for the home, more time to make these critical decisions and more bargaining power in the hands of buyers than at any time in the past few years,” said Nicole Bachaud, senior economist at Zillow. “Retailers, on the other hand, have to reset their expectations.”
The Associated Press contributed to this report.