Homesalesdisappointing again but Fed rate cut could be silver lining for buyers

US existing home sales fell more than expected in August as house prices remained elevated despite a continued improvement in supply.Home sales fell 2.5% last month to a seasonally adjusted annual rate of 3.86 million units, the National Association of Realtors said Thursday.Economists polled by Reuters had forecast home resales falling to a rate of 3.90 million units.Home resales, which account for a large portion of US housing sales, dropped 4.2% on a year-on-year basis in August.The median existing home price increased 3.1% from a year earlier to $416,700, the highest on record for any August.Home prices increased in all four regions.The Federal Reserve on Wednesday cut interest rates by 50 basis points, the first reduction in borrowing costs since 2020.

The move could see mortgage rates, which have retreated to 1-1/2-year lows, declining further.Lower mortgage rates could entice more homeowners to put their homes on the market, which could increase supply.Most homeowners have mortgage rates below 4% and so-called “rate lock” starved the market for previously owned homes of supply.Lower borrowing costs could, however, stimulate demand that outpaces supply, keeping house prices elevated.Fed Chair Jerome Powell told reporters on Wednesday that “the real issue with housing is that we have had and are on track to continue to have not enough housing,” adding “this is not something that the Fed can really fix, but I think as we normalize rates, you will see the housing market normalize.”Housing inventory increased 0.7% to 1.35 million units last month.

Supply jumped 22.7% from one year ago.Subscribe to our daily Business Report newsletter! Please provide a valid email address.

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“Home sales were disappointing again in August, but the recent development of lower mortgage ...