Home sales drop nearly 20% year-over-year as high interest rates continue to dampen buying

U.S. home sales plummeted year-over-year last month, declining as well on a monthly basis in an ongoing indication of the cooling housing market amid rising interest rates. 

Existing home sales in the United States "experienced a slight dip in August, marking the seventh consecutive month of declines," the National Association of Realtors said in a report on Wednesday.

Specifically, "total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, notched a minor contraction of 0.4% from July to a seasonally adjusted annual rate of 4.80 million in August," the association said.

"Year-over-year," meanwhile, "sales faded by 19.9%." 

The falling sales are a strong reflection of the sharply rising interest rates that have marked the Federal Reserve's aggressive efforts to tamp down inflation amid skyrocketing costs in just about every consumer sector.  Data from Freddie Mac shows 30-year fixed mortgage interest rates rising from 2.88% at the end of last September to 6.02% last week. 

Lawrence Yun, the NAR's chief economist, noted in the report that "inventory will remain tight in the coming months and even for the next couple of years." Part of the reason, he said, was high interest rates. 

"Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years," Yun said, "increasing the need for more new-home construction to boost supply."