Home resales continued to fall in August in the United States, for the seventh month in a row, as many potential buyers were discouraged by the rise in interest rates on mortgages, and despite a further decline in prices.
Last month, an annualized 4.80 million homes and apartments changed hands, according to data released Wednesday by the National Federation of American Realtors (NAR).
Resales are down 0.4% from July, and 19.9% from August 2021, when interest rates were at historic lows.
Prices, however, which had soared since the start of the pandemic, fell for the second month in a row. The median price thus stood at $389,500, after peaking at $413,800 in June, and remains 7.7% higher than the median price recorded in August 2021.
“The real estate sector is the most sensitive and suffers the most immediate impacts from changes in Federal Reserve interest rate policy,” said NAR Chief Economist Lawrence Yun.
Mortgage rates have risen since the beginning of 2022, and have even just exceeded 6%, for the first time since 2008, after the bursting of the real estate bubble.
To combat high inflation, the US central bank (Fed) is slowing down economic activity by raising its rates, which sets the tone for the various loans granted to households and businesses. And the movement should continue, since a new increase in its key rate is expected on Wednesday.
“The weakness in home sales reflects the rise in interest rates this year,” added Lawrence Yun, noting, however, that “homeowners are doing well” since sales are still happening quickly.
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At the end of August, 1.28 million properties were on sale, ie 1.5% less than in July and representing 3.2 months of sales at the current rate.
The real estate sector in the United States has suffered for years from a number of available properties that is too low compared to needs, a phenomenon exacerbated with the Covid-19 pandemic, due to high demand.
This “will remain tight in the coming months and even for the next two years,” warns Ms Yun.
Some owners are unwilling to sell because they had obtained a mortgage at a very low rate, “which increases the need for construction of new houses to stimulate supply”, she adds.