On Thursday, according to data from the National Association of Realtors (NAR), U.S. existing home sales in August hit a new low since October last year.

The total annualized number of U.S. existing home sales in August was 3.86 million units, falling short of the expected 3.9 million units and down from the previous value of 3.95 million units.

The month-on-month decline in existing home sales in August was 2.5%, compared to the expected drop of 1.3%, with the previous value in July being a month-on-month increase of 1.3%.

Over the past year, the annual average pace of existing home sales has been 4 million units, significantly lower than the pace of 5.3 million units in the year before the COVID-19 pandemic.

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The median sales price of homes in August increased by 3.1% year-over-year to $416,700.

This is the highest record for August in NAR data.

The inventory of existing homes increased for the eighth consecutive month in August, with the supply increasing by 0.7% to 1.35 million units, the highest level since October 2020, although still significantly lower than the average of 1.9 million units in the five years before the pandemic.

Based on the current sales pace, it would take about 4.2 months to deplete the market supply, lower than the inventory-to-sales ratio of 5 months, indicating that although inventory has risen, overall market supply remains relatively tight.

The proportion of first-time homebuyers in August was only 26%, tying the historical low.

Historically, first-time buyers generally account for about 40% of the market, indicating that many Americans are being priced out of the market due to affordability challenges.

According to data from the Mortgage Bankers Association (MBA), mortgage rates fell to the lowest level since September 2022 last week, triggering a surge in new home purchases and refinancing applications.

Lower housing financing costs will be particularly welcomed by first-time buyers, whose share of purchases in August hit a historical low.

The U.S. real estate market is pinning its hopes on a series of rate cuts by the Federal Reserve to revive demand.

On Wednesday this week, the Federal Reserve initiated the first rate cut of this easing cycle, with a substantial reduction of 50 basis points.

Federal Reserve Chairman Powell stated that due to the lock-in effect, the U.S. real estate market is in a frozen state.

Lower mortgage rates will encourage people to move, but the ongoing housing shortage is the real issue, which is not something the Federal Reserve can truly solve.

NAR Chief Economist Lawrence Yun stated: August's home sales were disappointing again, but the recent decline in mortgage rates coupled with the strong combination of increased inventory will support higher sales in the coming months.

The recent decrease in borrowing costs indicates that homeowners with a $2,000 monthly mortgage can afford a house priced $50,000 higher.

Insufficient inventory is a clear disadvantage, with many potential sellers reluctant to put their homes on the market and give up mortgage rates below 3%.

This so-called lock-in effect leads to a reduction of about 1 million home sales annually.

NAR data also shows that individual investors or second-home buyers purchased 19% of homes, compared to 16% a year ago.

Existing home sales account for about 90% of the U.S. real estate market sales, calculated at the time of closing.

Contracts are usually signed one or two months before closing, so the sales data for August mainly reflects purchase decisions made in July and June.

Next Wednesday, the U.S. government will release new home sales data for August, which is calculated based on contract signings and is considered a leading indicator of the U.S. real estate market.