Washington (AFP) – Sales of previously-owned homes in the United States hit their lowest rate in nine months, according to industry data released Wednesday, as high home prices and mortgage rates weighed on the market. Existing home sales dropped by 2.7 percent last month to a seasonally adjusted annual rate of 3.9 million, said the National Association of Realtors (NAR). A consensus forecast of analysts had expected a smaller pullback to a 4.0 million rate, according to Briefing.com. There was no change in sales on a year-on-year basis, the NAR said.
But the median home price jumped by two percent from a year ago to $435,300, a record high for the month of June, the association added. “Multiple years of undersupply are driving the record-high home price,” said NAR chief economist Lawrence Yun in a statement. “Home construction continues to lag population growth. This is holding back first-time home buyers from entering the market,” he added. High mortgage rates were also fueling the gloom in home sales, he said.
“If the average mortgage rates were to decline to six percent, our scenario analysis suggests an additional 160,000 renters becoming first-time homeowners and elevated sales activity from existing homeowners,” Yun said. The popular 30-year fixed-rate mortgage averaged around 6.8 percent in the second half of June, according to Freddie Mac data. This was similar to the level in mid-May and mid-April, data showed. Mortgage rates were significantly lower a few years ago.
The higher mortgage rates come as the US Federal Reserve has held the benchmark lending rate steady this year, with policymakers closely monitoring the economic effects of President Donald Trump’s fresh tariffs. But Trump has repeatedly criticized this approach — despite economists’ warnings that tariffs could fuel inflation over time and bog down growth.
Early Wednesday, Trump wrote in a social media post that “Housing in our Country is lagging” as the Fed “refuses to lower Interest Rates.” He reiterated his call for interest rates to be three percentage points lower than they currently stand. While lower interest rates can be a boost to the economy, they can also be associated with higher consumer prices.
© 2024 AFP
