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- Delaney Sawyer via Yahoo News - Latest News & Headlines
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US Home Sales Slow to Weakest Pace in Over a Year as Mortgage Rates and Prices Climb
ReUS Home Sales Slow to Weakest Pace in Over a Year as Mortgage Rates and Prices Climb
Existing home sales fell last month to their slowest pace in more than a year, pressured by mortgage rates at their highest level in over a year and steadily rising home prices that have sidelined many would-be buyers.
US home sales weakened last month to their slowest pace in more than a year, as mortgage rates climbed to their highest level in over a year and home prices continued to rise, according to industry data. The combination of elevated borrowing costs and stubbornly high prices has pushed many prospective buyers out of the market, cooling a housing sector that had shown signs of stabilizing earlier in the year.
The slowdown reflects a market caught between two forces: financing costs that remain well above the lows seen during the pandemic era, and sellers who have been reluctant to lower asking prices. For buyers, the math has become increasingly difficult. A mortgage rate at a one-year high adds hundreds of dollars to monthly payments on a typical home loan, while prices that continue to appreciate stretch budgets further. The result has been a pullback in purchase activity, with sales dropping last month as affordability pressures intensified.
Economists and housing analysts have pointed to the rate environment as the primary driver. When mortgage rates rise, buying power shrinks, and demand cools. That is what happened last month, when rates reached their highest level in more than a year. The move followed broader shifts in financial markets, where expectations about the path of interest rates have been volatile. Even small changes in mortgage rates can have an outsized effect on the housing market because they directly influence how much home a buyer can afford.
The sales decline is not just a story about rates. Home prices have also continued to climb, creating a double squeeze for buyers. In many markets, inventory remains limited, which keeps upward pressure on prices even as demand softens. Sellers who locked in low mortgage rates years ago may be reluctant to list their homes and take on a new, more expensive loan, further constraining supply. That dynamic has kept the market tighter than it might otherwise be, preventing sharper price declines that would normally accompany weaker sales.
For the broader economy, the housing slowdown matters because residential real estate is a key driver of consumer spending and economic activity. When home sales fall, related industries — from furniture and appliances to construction and remodeling — often feel the effects. A prolonged slump could weigh on growth, though the full impact depends on how long rates stay elevated and whether inventory conditions improve.
Buyers who remain in the market are adapting. Some are looking to adjustable-rate mortgages or paying points to lower their initial rate. Others are expanding their search to more affordable areas or waiting for rates to ease. But with rates at a one-year high and prices still rising, the path to homeownership has become more challenging for many Americans. The latest sales figures underscore how sensitive the housing market remains to financing costs, and how quickly momentum can fade when affordability erodes.
Whether the slowdown deepens will depend largely on the trajectory of mortgage rates and the supply of homes for sale. If rates retreat in the coming months, demand could pick back up. If they stay high, the market may remain sluggish, with sales stuck near current levels and price growth gradually moderating. For now, the data points to a housing market that is cooling under the weight of higher borrowing costs and persistent price pressures.
