U.S. home sales fall more than expected in August as supply and demand play out amid high home prices and Fed rate cuts
U.S. home sales fell more than expected in August as home prices remain high despite continued improvement in supply. The Federal Reserve cut interest rates by 50 basis points, the first reduction in borrowing costs since 2020. The move could send mortgage rates, which have fallen to one-and-a-half year lows, sliding further. Lower mortgage rates could entice more homeowners to put their homes on the market, which could increase supply. Most homeowners have mortgages at less than 4 percent, and so-called “rate locks” have kept the supply of second homes on the market short of demand. However, lower borrowing costs could boost demand, which could outpace supply and keep home prices high. Lawrence Yun, chief economist at NAR, the National Association of Realtors, said home sales disappointed again in August, but the recent drop in mortgage rates coupled with increased inventory is a powerful combination that will provide the environment for sales growth in the coming months.
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