The US property market is once again impacted by high interest rates! Existing home sales fell to a 14-month low in August, and interest rates on 30-year mortgages rose to 6.71%

The Zhitong Finance App learned that existing home sales in the US fell to their lowest level in 14 months in August, and mortgage interest rates continued to rise further curtailed demand for home purchases. At the same time, the inventory of houses for sale rose to the highest level in nearly seven years, and housing stayed on the market longer. However, in the face of weak demand, US housing prices continued to rise year on year, highlighting that high financing costs and housing affordability issues continue to plague the real estate market.

According to data released by the National Association of Realtors (NAR) on Thursday, existing home sales in the US fell 2.0% month-on-month in August, and seasonally adjusted annualized sales fell to 3.98 million units, the lowest level since June 2025, which is in line with the expectations of the economists surveyed. Compared with the same period last year, existing home sales fell 1.2% in August. From a regional perspective, sales in the northeastern, midwestern, and southern regions of the US all declined, while the western region remained the same as the previous month.

Existing home sales data is calculated based on the time the housing transaction was finally completed, so the August data largely reflects the housing purchase contracts signed in June and July of this year, and this period coincided with the continued rise in US mortgage interest rates.

According to the data, the most common interest rate for 30-year fixed mortgages in the US reached 6.66% at the end of July and rose further to 6.71% last week, the highest level in over a year.

Since the US and Israel launched an attack on Iran at the end of February this year, the average interest rate on US 30-year mortgages has cumulatively increased by more than 70 basis points. Mortgage interest rates are generally highly correlated with the yield on US long-term treasury bonds, and concerns about inflation caused by the recent war in Iran, uncertainty about the Fed's monetary policy prospects, and continued expansion of US government debt have all contributed to higher long-term US bond yields and further transmission to housing financing costs.

NAR chief economist Lawrence Yun said, “As mortgage interest rates are high, it is not surprising that home-buying activity has declined moderately.”

It is worth noting that while the volume of transactions is falling, supply in the US housing market is increasing markedly. Inventory of existing homes increased 3.2% month-on-month in August to 1.62 million units, the highest level since November 2019; compared with the same period last year, inventory increased by 5.9%.

Based on the current sales rate, it will take about 4.9 months to absorb the entire existing inventory, up from 4.6 months in July and the same period last year. The increase in inventories means that the housing supply situation in the US, which has been extremely tight in recent years, is gradually improving, and also indicates that the rate of housing sales has slowed down.

The median length of stay on the market for properties listed in August was extended from 29 days in July to 31 days, the same as the same period last year. The share of distressed real estate sales, including foreclosed homes, remained at 2%.

However, even under pressure on demand and an increase in inventories, there has been no significant decline in US housing prices. The median sales price of existing homes in the US rose 1.6% year on year to US$4291,000 in August. This means that although high mortgage interest rates have depressed transaction activity, they have yet to cause a significant drop in housing prices across the country.

First-time buyers accounted for 30% of all existing home transactions from 29% in July, up from 28% in the same period last year. However, NAR believes that a healthy and active housing market usually requires a share of about 40% of first-time homebuyers, which is still clearly low.