US existing home sales fall despite declining mortgage rates

19th Sep 2024 15:51

(Sharecast News) - Existing US homes sales fell to a 10-month low in August despite a fall in mortgage rates during the month, according to data published on Thursday, although mortgage applications pointed towards a pick up this month and October.

Sales decreased 2.5% month on month to a 3.86 million the National Association of Realtors said.

"Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months," NAR chief economist Lawrence Yun said.

House prices continued to rise, with the median on an existing home rising 3.1% to a new record high of $416,700.

"We expect existing home sales to trend higher from here in response to lower interest rates and an increase in the supply of homes for sale," said Nancy Vanden Houten, lead US economist at Oxford Economics.

The US Federal Reserve on Wednesday moved to stimulate markets with a bumper 50 basis point cut in its benchmark rate.

"The supply of homes for sale continued to increase, with inventory up 23% from a year ago. Inventory will likely increase further as lower rates bring more sellers off the sidelines."

"Increases in supply have weighed on recent home price growth. While inventory may continue to increase, with think an increase in demand will limit the downside for home price growth."

Reporting by Frank Prenesti for Sharecast.com