In the United States, the sales of existing homes in September saw a decline, reaching the lowest level since October 2010. This could be attributed to potential buyers still waiting for a drop in mortgage rates, while housing prices remain stubbornly high.
According to the National Association of Realtors (NAR), the latest data released on Wednesday, October 23rd, shows a 1% decrease in existing home sales in September compared to August. The seasonally adjusted annual sales rate stood at 3.84 million units, marking the lowest annual growth rate in nearly 14 years as the real estate market continues to struggle post the housing market crash of the late 2000s.
September’s existing home sales dropped by 3.5% compared to the same period last year, falling below economists’ expectations. Economists surveyed by Reuters had predicted sales to be at 3.86 million units for the month, while financial data and software company FactSet indicated economists anticipated 3.9 million units.
The surge in mortgage rates earlier in the year had restrained home sales, making it difficult for the market to bounce back.
Mortgage rates initially declined after the Federal Reserve’s rate cut last month, but have risen again in the past three weeks. Potential homebuyers are still holding off as they anticipate a further decrease in borrowing costs.
Despite the slowdown in sales, housing prices have continued to rise year-over-year for the 15th consecutive month. The national median sales price rose by 3% compared to the same period last year, reaching $404,500.
Lawrence Yun, Chief Economist at the National Association of Realtors, stated, “Over the past 12 months, existing home sales have mostly been hovering around the 4 million mark, but the factors that typically drive growth in existing home sales are starting to materialize.”
As sales slow down, housing inventory has been on the rise. By the end of September, there were 1.39 million homes listed for sale, a 1.5% increase from August and a 23% increase from September of the previous year. At the current sales pace, this equates to a 4.3-month supply, higher than the 3.4-month supply at the same time last year.
“For buyers, more inventory is undoubtedly good news as it gives consumers more properties to consider before making a decision,” Yun noted. “However, due to the very low mortgage delinquency rate, the inventory of distressed properties remains very low. In September, distressed property sales accounted for only 2% of all transactions.”