The US existing home sales market has witnessed a significant downturn, with sales plummeting to a 14-year low. According to data released by the National Association of Realtors (NAR), existing home sales declined by 7.7% in August 2024, reaching a seasonally adjusted annual rate of 4.08 million units. This marks the lowest level since November 2010, when the housing market was still reeling from the aftermath of the financial crisis. The decline in sales can be attributed to various factors, including rising interest rates, escalating home prices, and dwindling affordability.

The surge in interest rates has been a major contributor to the decline in existing home sales. The 30-year fixed mortgage rate has increased significantly, reaching 6.9% in August 2024, up from 3.9% in August 2022. This increase has resulted in higher mortgage payments, making homeownership less affordable for many prospective buyers. Additionally, home prices continue to remain elevated, with the median existing home price rising by 4.6% year-over-year to $390,000. While price growth has slowed, it still outpaces wage growth, further exacerbating affordability concerns. The NAR reports that the median household income required to afford a median-priced home has increased by 15% over the past year.

The decline in existing home sales is not uniform across the country, with regional variations evident. Sales in the Northeast declined by 10.1%, while the Midwest and South experienced declines of 7.1% and 6.5%, respectively. The West Coast, however, witnessed a relatively modest decline of 4.4%. The slowdown in the housing market has significant economic implications, as it accounts for approximately 15% of the US GDP. A decline in housing activity can have a ripple effect on related industries, such as construction, furniture, and appliances. Furthermore, the slowdown can also impact consumer spending, as homeowners are less likely to invest in renovations and improvements.

As the housing market continues to navigate these challenges, experts predict that sales will remain sluggish in the near term. The NAR forecasts existing home sales to decline by 5.5% in 2024, before stabilizing in 2025. To address affordability concerns, policymakers are considering measures such as increasing the supply of affordable housing and implementing programs to assist first-time homebuyers. Additionally, some experts suggest that the slowdown in the housing market may prompt the Federal Reserve to reassess its interest rate policy, potentially leading to a more dovish stance. As the housing market continues to evolve, one thing is certain – adaptability and innovation will be essential in addressing the complex challenges facing the US real estate market. With the upcoming release of new housing data, industry stakeholders will be watching closely for signs of stabilization or potential recovery.