Realtors: Home sales collapse, falling 16% year-over-year as rate hikes bite

Aug. 22 (UPI) -- Existing home sales in the U.S. market dropped month-on-month in July by 2.2% and are more than 16% below levels from this time last year as higher lending rates take their toll, the National Association of Realtors said Tuesday.

Some 4.07 million single-family homes were sold last month, down from the 4.9 million over the same period last year.

"Two factors are driving current sales activity: inventory availability and mortgage rates," the Realtors' group's chief economist, Lawrence Yun, said Tuesday. "Unfortunately, both have been unfavorable to buyers."

There were 1.1 million units on the market last month, down 14.6% from a year ago. The rate on a 30-year, fixed-rate mortgage averaged 7.09% as of Thursday, up nearly 2 percentage points from the same time last year.

Home prices, meanwhile, are on the rise. The Realtors' group put the average median price of an existing home at $406,700, marking the fourth month in a little over a year during which prices topped $400,000.

Mortgage applications are on the decline, according to the Mortgage Bankers Association. Elsewhere, the number of applicants searching for an adjustable-rate mortgage increased to its highest level since April as borrowers look for better terms.

While some homeowners are looking for variable-rate mortgages for relief, others are staying put to capitalize on their lower lending rates, creating a supply issue for the housing market.

Lending rates could move even higher if the Federal Reserve decides inflationary pressures are still running high enough to warrant further action. Yun at the Realtors' organization said a policy reversal may be necessary for a rebound in the housing market.

"Retreating mortgage rates will bring more buyers and sellers to the market and get Americans moving again," he said.