Key Takeaways:
– Home sales fell 2 percent between August and September and retreated 15.4 percent from a year ago
– Limited inventory and low housing affordability continue to hamper home sales
– The rise in mortgage rates has created a shortage of homes for sale
– Existing home prices in September were almost 3 percent higher than a year before
– Home sales in the Northeast rose 4.2 percent in September and fell 16.7 percent from a year ago
– Sales in the Midwest fell 4.1 percent from the previous month and were down 18.4 percent from a year ago
– The South saw sales fall 1.1 percent from August and 11.7 percent from a year ago
– Existing home sales in the West fell 5.3 percent from the previous month and were down 19.3 percent from one year ago
inman:
Home sales fell 2 percent between August and September and retreated 15.4 percent from a year ago as prices and interest rates climbed.
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Sales of existing homes dropped in September as mortgage rates continued their climb to 20-year highs.
Home sales fell 2 percent between August and September and retreated 15.4 percent from a year ago, according to data released Thursday by the National Association of Realtors. Sales landed at a seasonally adjusted annual rate of 3.96 million.
“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” NAR Chief Economist Lawrence Yun said in a statement. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”
The 30-year fixed mortgage rate averaged 7.57 percent as of Oct. 12, according to Freddie Mac, up from 7.49 percent the previous week and 6.92 percent one year ago.
Total housing inventory registered at the end of September was 1.13 million, up from 2.7 percent in August but down 8.1 percent from a year ago, according to NAR. The steep rise in mortgage rates has created a “lock in” effect wherein would-be homesellers are reluctant to list their homes and lose their lower mortgage rates, resulting in a dire shortage of homes for sale.
“Home sales have slowed to their slowest pace in more than a decade, yet existing home prices in September were still almost 3 percent higher than a year before. You don’t normally see prices rise at the same time that sales fall,” said Holden Lewis, a home and mortgage expert at NerdWallet. “We’re seeing it now because there’s a shortage of homes for sale.”
The median existing-home price for all housing types in September was $394,300, an increase of 2.8 percent from a year earlier, according to NAR.
Home sales in the Northeast rose 4.2 percent in September and fell 16.7 percent from a year ago. Sales in the Midwest fell 4.1 percent from the previous month and were down 18.4 percent from a year ago. The South saw sales fall 1.1 percent from August and 11.7 percent from a year ago, while existing home sales in the West fell 5.3 percent from the previous month and were down 19.3 percent from one year ago.
“The Northeast posted the strongest price gain resulting from higher demand coupled with inventory falling by 20 percent,” 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.”
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Property Chomp's Take:
The real estate market is experiencing a slowdown as home sales fell 2 percent between August and September, and retreated 15.4 percent from a year ago. This decline can be attributed to the increase in prices and interest rates.
According to data released by the National Association of Realtors (NAR), sales of existing homes landed at a seasonally adjusted annual rate of 3.96 million in September. This decrease in sales is due to limited inventory and low housing affordability, which have been ongoing challenges throughout the year. Lawrence Yun, the Chief Economist at NAR, stated that the Federal Reserve cannot continue raising interest rates in light of softening inflation and weakening job gains.
Mortgage rates have been climbing, reaching 20-year highs. The 30-year fixed mortgage rate averaged 7.57 percent as of October 12, according to Freddie Mac. This is up from 7.49 percent the previous week and 6.92 percent one year ago. The steep rise in mortgage rates has created a "lock-in" effect, where potential sellers are reluctant to list their homes and lose their lower mortgage rates. This has resulted in a dire shortage of homes for sale.
Despite the slowdown in sales, existing home prices have continued to rise. In September, the median existing-home price for all housing types was $394,300, an increase of 2.8 percent from a year earlier. This is an unusual trend, as prices typically do not rise while sales fall. Holden Lewis, a home and mortgage expert at NerdWallet, attributes this phenomenon to the shortage of homes for sale.
Regional variations were observed in home sales. The Northeast saw a 4.2 percent increase in sales in September but experienced a 16.7 percent decline from a year ago. Sales in the Midwest fell 4.1 percent from the previous month and were down 18.4 percent from a year ago. The South saw a 1.1 percent decrease in sales from August and an 11.7 percent decrease from a year ago. In the West, existing home sales fell 5.3 percent from the previous month and were down 19.3 percent from one year ago.
In conclusion, the real estate market is facing challenges due to rising prices and interest rates. Limited inventory and low housing affordability have resulted in a slowdown in home sales. However, despite the decline in sales, existing home prices have continued to rise. It is crucial for potential buyers and sellers to stay informed about market trends and make informed decisions.
