High borrowing costs push down American housing sales

Home resales in the United States were down in August, the third consecutive month of declining activity. A recent report from TD Economics noted sales in the U.S. declined two per cent month over month, and slightly more than one per cent from a year ago.

It pointed to affordability hampering demand growth. Notably, higher interest rates for the popular 30-year term mortgages in the U.S. are now approaching seven per cent, making it challenging for first-time buyers to qualify for mortgages.

In turn, buyer activity has been below the historical average, TD stated, noting other high costs are also posing headwinds for demand growth.

Despite falling sales, the median price of a home in the U.S. was up nearly two per cent year over year in August to $585,000, based on data from the National Association of Realtors.

That's despite rising inventory, which increased about three per cent from July and nearly six per cent from last August.

Sales fell the most by percentage in the nation's northeast, off four per cent. Only the western U.S. experience no percentage decline in sales in August — though activity was flat year over year.

The TD report added that market supply continues to be tight despite increases in inventory, which has provided buyers with more choice. A key supply constraint has been higher building costs, driven higher by tariffs over the last year, leading to higher prices for new homes, which are out of reach financially to first-time buyers amid increased mortgage interest rates.

TD pointed to U.S. labour market growth providing some demand support. Yet it added that many households are hard-pressed financially due to higher costs overall. TD forecast that expected higher-than-normal inflation is likely to keep home sales "subdued" for the remainder of 2026.