Existing home sales fall to a 10-year low in September
Realtor Rebecca Van Camp places a “Sold” poster on her sign in front of a home in Meridian, Idaho, Wednesday, Oct. 21, 2020.
Darin Oswald | Tribune News Service | Getty Images
Existing homes are selling at the slowest pace since September 201[ads1]2, with the exception of a brief drop at the start of the Covid 19 pandemic.
Sales of previously owned homes fell 1.5% in September from August to a seasonally adjusted annual rate of 4.71 million units, according to a monthly survey by the National Association of Realtors.
It marked the eighth consecutive month of sales decline. Sales were lower by 23.8% year-on-year.
Sharply higher mortgage interest rates cause a sharp decline in the housing market. The average interest rate on the 30-year fixed mortgage is now in excess of 7%, after starting this year around 3%. It makes an already expensive housing market even less affordable.
Despite the decline in sales, inventory continues to decline. There were 1.25 million homes for sale at the end of September, down 0.8% compared to September 2021. At today’s sales rate, that represents 3.2 months of supply. Six months is considered a balanced supply.
“Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” said Lawrence Yun, chief economist at NAR. “The current lack of supply underscores the stark contrast to the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”
The tight supply continues to put pressure on house prices. The median price of an existing home sold in September was $384,800, an increase of 8.4% from September 2021. Prices rose across all price points. This gives 127 consecutive months of annual increases.
However, the prices are cooling. September marked the third consecutive month-on-month price decline, which usually occurs this time of year.
However, they are falling harder this year, especially at the lower end of the market, where inventory is much leaner. Homes priced between $100,000 and $250,000 fell 28.4% from a year ago, while sales of homes priced between $750,000 and $1 million fell 9.5%.
Houses were on the market slightly longer in September, an average of 19 days, up from 16 days in August and 17 days in September 2021.
Higher mortgage interest rates don’t just scare off potential buyers. They keep sellers on the sidelines as well, adding to the inventory crunch.
“Homeowners love the 3% mortgage rate, and they don’t want to give it up,” Yun said.
