Existing-home sales down, as home prices remain high.

Existing-home sales were down in three out of the four major regions in the US in September as the housing market continued to deal with higher mortgage rates and low inventory. Sales rose in the Northeast when compared with August, but were down in the South, Midwest and West. All four regions registered declines from a year ago, according to a report from the National Association of Realtors® (NAR).

Overall, existing-home sales were down 2.0% from August to a seasonally adjusted rate of 3.96 million. Year-over-year, sales were down 15.4%. Here’s how the number broke out on a regional basis:

• Northeast: Up 4.2%, an annual rate of 500,000, down 16.7% from September 2022
• Midwest: Down 4.1% to an annual rate of 930,000, down 18.4% from September 2022
• South: Down 1.1% to an annual rate of 1,820,000, down 11.74% from September 2022
• West: Down 5.3% with an annual rate of 710,000, down 19.3% from September 2022

"As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales," said Lawrence Yun, NAR Chief Economist. "The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains."

The Federal Reserve’s federal funds rate is one factor that affects mortgage rates. Find out how mortgage rates are trending this week.

Digging into the numbers

Month-over-month as well as year-over-year numbers continued their trend of declines in September. Year-over-year numbers were very similar to where they were in August. As we enter the fall, a season that traditionally sees fewer and fewer market activity, we could see this trend continue.

First-time buyers were responsible for 27% of sales in September, down from 29% in August 2023 and September 2022. All-cash sales made up 29% of transactions in September, up from 27% in August and 22% in September 2022. Individual investors or second-home buyers, many of whom buy in all cash, were responsible for 18% of home sales in September, up from 16% in August and 15% one year ago.

Inventory and affordability concerns

Total housing inventory actually went up in September, rising 2.7% to 1.13 million units. However, a year ago, there were 1.23 million units for sale, an 8.1% decline in one year. The lack of homes for sale is pushing home prices to rise, putting a strain on how much homebuyers can afford.

"For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply," Yun said.

The median existing-home price dropped below $400,000 for the first time in three months. In September it registered an increase of 2.8% from September of 2022.

Home prices coming down in the fall is a sign that some aspects of the housing market have returned to normal from the upheaval that occurred during the pandemic. It’s also one reason why fall is a great season to consider buying a home.

If you’re in the market, reach out to a loan officer, or get started by getting pre-approved for a mortgage in just a few minutes.

Source: https://www.nar.realtor/newsroom/existing-home-sales-fell-2-0-in-september