The housing market experienced a significant pullback in September, with existing home sales witnessing a 2% decline, reducing the seasonally adjusted annual rate to 3.96 million, according to the National Association of Realtors (NAR). Year-over-year, this figure stands at a drop of 15.4%, making it a notable contraction since the height of 4.68 million sales in September 2022.
The median existing-home sales price saw a modest rise of 2.8%, reaching $394,300. “For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply,” NAR Chief Economist Lawrence Yun said.
Despite the decelerating sales, inventory expanded, with unsold existing homes registering an increase of 2.7% compared to the previous month, totaling 1.13 million by September's end. The typical duration a property remained on the market was 21 days in September, a minor increase from 19 days the previous year.
Regional disparities in sales emerged. While the Northeast experienced a sales surge, up 4.2%, the Midwest (-4.1%), South (-1.1%), and West (-5.3%) reported reductions. However, all regions noted decreases in year-over-year sales. Prices across all regions increased, with the Northeast and the Midwest recording the most significant price jumps.
“The Northeast posted the strongest price gain resulting from higher demand coupled with inventory falling by 20%,” Yun said. “The West experienced softer price growth reflecting a pause after years of unsustainable and rapid price increases, especially in the Rocky Mountain region.” All-cash sales and individual investor purchases grew, whereas first-time buyer sales shrunk to 27% from 29% the preceding year.
Mortgage rates continued to climb, with the 30-year fixed-rate mortgage averaging 7.57% as of Oct. 12 and reportedly reaching 8% this week.
“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said Yun. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”
NAR's data highlighted the dominance of conventional single-family homes in sales, capturing an adjusted annual rate of 3.53 million in September. Concurrently, condo and co-op sales dropped to an annual rate of 430,000 units.
