WASHINGTON D.C.: In September, existing U.S. home sales dropped for an eighth consecutive month and will likely fall further, as the economic sector is facing the Federal Reserve's aggressive interest rate hikes, according to a report from the National Association of Realtors.

The report's finding is in contrast with a strong U.S. job market report by the Labor Department, which showed an unexpected drop last week in the number of people seeking unemployment benefits, for the first time.

The two reports highlight the uneven impact from the fastest acceleration of Fed rate hikes in some four decades.

The rate-sensitive housing market, which surged during the COVID-19 pandemic on previously low borrowing costs and demand for more living space during lockdowns, has been stifled by soaring mortgage rates of almost 7 percent, the highest in 20 years.

Based on its own projections and recent comments, the Fed raised its benchmark overnight interest rate from near zero in March to the current range of 3.00 to 3.25 percent, and this could rise further to the mid-4 percent range by the end the year.

Economists polled by Reuters predicted sales to decrease to a rate of 4.70 million units.

Home resales, which account for most U.S. home sales, declined by 23.8 percent year-on-year.

Moving in line with U.S. Treasury yields, mortgage rates rose even higher. Data from mortgage finance agency Freddie Mac showed that a 30-year fixed mortgage averaged 6.94 percent in the latest week, the highest in 20 years and up from 6.92 percent in the prior week.

According to NAR Chief Economist Lawrence Yun, the September sales numbers do not reflect the latest surge in mortgage rates, and he expects the sales rate to decline further, to as low as 4.5 million annually, or roughly 4 to 5 percent lower than the current sales pace.

"The details of the report suggest that housing is no longer a sellers' market. Until this summer, home prices continued to rise, despite declining demand; likely because supply was also muted.

However, the balance of power is finally shifting from sellers to buyers," said Aneta Markowska, chief financial economist at Jefferies, as quoted by Reuters.

On the other hand, there are few signs that the labor market is loosening or whether employers are cutting jobs.

The Labor Department said that initial claims for state unemployment benefits fell unexpectedly by 12,000 to a seasonally adjusted 214,000 for the week ending 15th October.

Economists polled by Reuters had forecast 230,000 applications for the latest week, but data for the prior week was revised to show 2,000 fewer applications filed than previously reported.

Earlier this month, the U.S. government said that job openings dropped by 1.1 million to 10.1 million on the final day of August, the largest decline since April 2020.

In a note to clients, Nancy Vanden Houten, lead U.S. economist at Oxford Economics, stated, "Even as the economy slows, employers appear to be reluctant to lay off workers that they have struggled to hire and retain."