Invest1 publisher3 min readPublished
Single-family home sales fall below their 1996 pace with mortgage rates at 6.76 per cent
Sales of existing single-family homes fell for a third straight month in August, even though wages have outrun home prices for four years and Freddie Mac's 30-year fixed average sits at 6.76 per cent.
The Investor · Invest desk
What happened
- The National Association of Realtors put August sales of existing single-family homes at a 3.62 million annual rate, down 1.9 per cent from July and the third consecutive monthly decline.
- That pace runs 25 per cent below August 2019, 9 per cent below August 2009 during the Housing Bust, and 5 per cent below August 1996.
- Single-family months of supply reached 4.7, the same as the summer of 2016 and the highest reading since November 2015.
- Condo and co-op sales fell 2.7 per cent from July to a 360,000 annual rate, matching the record low in data that begin in late 2011.
- Freddie Mac's weekly measure had the average 30-year fixed mortgage rate rising to 6.76 per cent in the same week.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- exposure Condo sellers carry the worst of it with 6.6 months of supply, the most since 2012, while condos are only about 9 per cent of the 3.98 million total sales rate, so their record low barely dents the national number.
- cost The marginal buyer pays about $2,260 a month in principal and interest on the $434,800 August median with 20 per cent down at 6.76 per cent, and that payment is what four years of wage gains have not touched.
- decision Every listed seller now chooses between cutting the asking price and waiting for a bid, and a 1.7 per cent year-over-year gain in the national median is what waiting has paid so far.
- constraint Homebuilders and mortgage credit sit outside this data entirely, so any read-through to builder volumes or delinquencies rests on inference rather than on anything reported here.
Months of supply is a ratio, and in August both halves of it moved. Inventory rose and sales fell in the same month, which is how a ratio built from both gets to 4.71: 1.42 million single-family homes for sale divided by one month of the 3.62 million annual pace, or 301,667 [4][1][18].
The affordability arithmetic has been improving for four years. Since the price run ended in June 2022, the national median single-family price is up 3.3 per cent, average hourly earnings are up 17.3 per cent and CPI is up 12.8 per cent [14]. Divide through and the median is 11.9 per cent cheaper measured against hourly earnings [19] and 8.4 per cent cheaper measured against consumer prices [20]. Sales went down anyway, for a third month running [1].
Wolf Richter, who published the analysis of the NAR release at Wolf Street, wrote: "The average weekly mortgage rate, at 6.76%, is not high historically. Inflation is high. And home prices are high." [11] He dated the affordability problem to a 40 per cent rise in the national median price over the two years to mid-2022 [15], and put rates near 7 per cent at the low end of the range that prevailed before the Fed began buying Treasuries and mortgage-backed securities in 2008 [12].
The West is the cleanest test of the rate story. August sales there were 720,000, unchanged from a July figure that had been revised down, and 2.7 per cent below August 2025, August 2024 and August 2023 alike [8][9]. Equal declines against three different years put each of those Augusts at about 740,000 [22]. Flat for three years, then a step down. The level is 36.8 per cent under August 2019 [9].
The long comparisons here are of seasonally adjusted annual sales rates, not sales per household, and the release carries no population or household figures [24].
So there are three ways this resolves. Prices cut until the listings clear, and the median moves before the sales line does. Rates fall a point and sales lift, in which case the last four years were a financing story. Or the monthly prints keep getting revised the way July's West number was [8], and a 1.9 per cent monthly decline sits inside the noise [1].
My read is the first. Four years in which earnings outran the median price by 11.9 per cent produced a 1.1 per cent year-over-year decline in sales [19][2], so the buyer at the margin is priced off the monthly payment and not off a price-to-wage ratio. Sales turning up while the 30-year fixed holds near 6.76 per cent would prove that wrong [10].
What to watch
- The September NAR print: single-family sales turning up with the 30-year fixed still near 6.76 per cent would make this a financing story.
- Revisions to the 3.62 million August rate, given that July's West figure was revised down before this print.
- Whether the national median price turns negative year over year as listings keep building.