The number of previously occupied homes sold in the United States dropped by 21% over the past year, according to new data from the National Association of Realtors (NAR) released Thursday.
That’s on top of an 18% annual decline the year before, indicating the housing market has continued to slow down amid rising interest rates.
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“Perhaps there could be some recovery taking place, but the last couple of data releases are implying no,” said Lawrence Yun, the NAR’s chief economist. “Things are slumping down again.”
The housing market has broadly slowed down over the past year as the Federal Reserve has increased interest rates.
Higher interest rates have made it more expensive for home buyers to finance their homes with mortgages, ratcheting up the costs for all but the most cash-rich buyers.
At the root of the problem is a dearth of inventory, Yun said.
The NAR counts 1.1 million homes on the market at the end of August – a 14% drop from a year ago.
Many homeowners who are thinking of selling remain reluctant to pay off mortgages they bought years ago at lower rates, only to buy a new home at much higher financing costs.
Home builders, meanwhile, are building new homes at a slower rate as their loans are also more expensive, Yun said.
“With the inventory shortage and housing shortage in America, the builders really cut back last month … that was really disappointing,” Yun said.