Sales of new U.S. single-family homes fell in July, indicating a housing market struggling with high mortgage rates. Economists predict a continued slump through the end of the year due to affordability challenges and slower job growth. New home sales dropped 0.6% to 652,000 units, with a year-over-year decline of 8.2%.

Economists expect residential investment to contract for a third straight quarter in the third quarter. The housing market has been negatively impacted by the Federal Reserve’s tight monetary policy, prompting speculation of a rate cut in September. The average rate on a 30-year fixed-rate mortgage has decreased, but inventory of unsold homes remains high.

The median new house price dropped 5.9% to $403,800 in July, the lowest in eight months. Most homes sold were priced under $499,000, with builders increasingly cutting prices to attract buyers. At the current sales pace, it would take 9.2 months to clear the supply of new houses on the market, unchanged from June.

Read more at Yahoo Finance: New US home sales fall as high borrowing costs stifle housing demand