Fewer home listings and high interest rates led to a drop in sales of older homes, which fell 0.7 per cent in August to an annual rate of 4.04 million units, the National Association of Realtors said on Thursday.

If every month's sales were the same as August's, the annual rate would be 4.04 million homes sold. These figures are seasonally adjusted.

August sales activity was the lowest since the 2010 Great Recession.

The drop in sales was lower than Wall Street economists had expected. They had predicted that existing home sales would total 4.1 million in August.

Compared to August 2022, manufactured home sales were down 15.3%. From January to August alone, sales were down 21%.

KEY DETAILS The median price of an existing home in August was $407,100, up 3.9 percent from a year ago. This was the highest price in August since NAR began tracking the data.

Home prices peaked in June 2022, when the median price of a resale home was $413,800.

NAR noted that about 31 percent of properties sold for more than the list price.

The total number of homes for sale in August was 1.1 million, down 14.1 percent from a year ago, and August's inventory was the lowest since NAR began tracking the data in 1999.

Homes listed for sale stayed on the market for an average of 20 days, unchanged from the previous month. Last August, homes stayed on the market for an average of just 16 days.

Existing-home sales nationwide increased only 1 percent in the Midwest. The median price of a resale home in the region was $305,300.

All-cash buyers accounted for 27 percent of sales. Individual investors or second home buyers accounted for 16 percent. About 29 percent of homes sold to first-time buyers.

Overall: Today's homebuyers are facing an unfriendly real estate market due to the dual challenges of high mortgage rates and low inventory. Competition for a limited number of listings, coupled with rising home prices and higher borrowing costs, has made homeownership much more expensive and slowed the real estate industry.

While homebuyers are not as sensitive to interest rates as they once were, as evidenced by the small increase in home purchase applications in recent weeks, most experts believe that lower interest rates will lead to an increase in the supply of housing and improve affordability.

So says the National Association of Realtors: "Mortgage rates are likely to rise to 8 per cent in the near term," says Lawrence Yun, chief economist at the National Association of Realtors.

Cloud explained that interest rates could rise significantly, based on the trend of 10-year rates exceeding 4.5 per cent. He added that if rates rise, it could push home sales to new lows in the coming months.

Yoon also noted that a possible government shutdown and the expiration of the National Flood Insurance Program are also big concerns that could further hurt sales.

What they're saying.

"With mortgage rates rising, all momentum in the housing market in early 2023 has gone up in smoke. 2023 could end with a sigh of relief for the real estate sector, as any substantial pullback in interest rates is likely to continue well into 2024," Ben Ayers, senior economist at Nationwide, said in a statement said.