High Mortgage Rates Through the Summer Dented Resale Demand
Source: Economics Group of Wells Fargo Bank, N.A
Summary
Poor Affordability Conditions Continue to Bite
Conditions remain generally poor in the resale market. After improving in July, existing home sales dipped 2.5% in August to a seasonally adjusted annual rate of 3.86 million, nearly returning to the prior cycle low reached in October 2023. Although mortgage rates have retreated meaningfully in recent weeks, rates at the time of contract signings in June and July were still running near 7.0%.
It is likely that mortgage rate improvements since then will serve to spark housing demand in the coming months. However, rates are only one factor holding back sales. Single-family resale prices were up 2.9% year-over-year in August, a slightly lower price hike than in prior months but a solid increase nonetheless. Ongoing price increases pile on top of the hefty price appreciation that has already occurred.
Conditions remain generally poor in the resale market. After improving in July, existing home sales dipped 2.5% in August to a seasonally adjusted annual rate of 3.86 million, nearly returning to the prior cycle low reached in October 2023. Although mortgage rates have retreated meaningfully in recent weeks, rates at the time of contract signings in June and July were still running near 7.0%.
It is likely that mortgage rate improvements since then will serve to spark housing demand in the coming months. However, rates are only one factor holding back sales. Single-family resale prices were up 2.9% year-over-year in August, a slightly lower price hike than in prior months but a solid increase nonetheless. Ongoing price increases pile on top of the hefty price appreciation that has already occurred.