U.S. home sales/ real estate market/ housing market/ mortgage rates/ home prices/ inventory rise/ housing slump/ Newslooks/ LOS ANGELES/ J. Mansour/ Morning Edition/ U.S. home sales fell in September to their lowest annual pace in nearly 14 years, as high mortgage rates and rising inventory contributed to the slowdown. Sales dropped 1% from August and 3.5% from last year, while home prices continued to rise, marking 15 consecutive months of annual price increases.
U.S. Home Sales Slump to 14-Year Low as Mortgage Rates Rise – Quick Look
- Existing home sales dropped 1% in September to an annual rate of 3.84 million, the slowest pace since 2010.
- Sales were down 3.5% year-over-year, missing economists’ expectations of 3.9 million.
- Median home prices increased 3% to $404,500, the 15th consecutive month of annual price gains.
- Inventory rose to 1.39 million homes, up 23% from last year.
- Mortgage rates remain high, contributing to a sales slump that began in 2022.
U.S. Home Sales Hit 14-Year Low in September as Market Slows
Deep Look
U.S. home sales continued to decline in September, reaching the lowest annual pace in nearly 14 years. The National Association of Realtors (NAR) reported Wednesday that existing home sales fell by 1% from August, to a seasonally adjusted annual rate of 3.84 million. This marks the slowest sales pace since October 2010, when the housing market was still recovering from the real estate crash of the late 2000s.
Compared to September 2023, sales were down 3.5%, and they fell short of economists’ expectations of a 3.9 million annual rate, according to FactSet. The housing market has been facing ongoing challenges, particularly since 2022, when mortgage rates began to climb from the pandemic-era lows that fueled a brief housing boom.
Rising Prices Amid Slower Sales
Despite the slowdown in sales, home prices continue to rise. The national median sales price for existing homes increased 3% year-over-year in September to $404,500. This marks the 15th straight month of price growth, driven in part by limited supply and ongoing demand from buyers willing to navigate higher borrowing costs.
“Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” said Lawrence Yun, chief economist at the NAR. He pointed to improving conditions like slightly lower mortgage rates and increased inventory as potential catalysts for future recovery.
Inventory Levels Climb
One notable trend is the steady rise in home inventory. The total number of unsold homes on the market at the end of September reached 1.39 million, a 1.5% increase from August and a 23% rise compared to the same time last year. At the current sales pace, this translates to a 4.3-month supply of homes, up from a 3.4-month supply last year. A balanced housing market typically has about 5- to 6-months of inventory, indicating that the market is still skewed in favor of sellers.
The Impact of Mortgage Rates
The U.S. housing market has been in a slump since 2022, largely due to rising mortgage rates. The average rate on a 30-year mortgage hit nearly 8% last year, reaching a 23-year high, according to Freddie Mac. While mortgage rates have eased somewhat since July—dropping to an average of 6.08% four weeks ago—they have since edged back up to 6.44% last week. High borrowing costs continue to weigh on buyers, limiting affordability and keeping many potential homeowners on the sidelines.
The Road Ahead
With mortgage rates fluctuating and inventory increasing, the future of the U.S. housing market remains uncertain. Although there are signs of stabilization, the ongoing challenges of high mortgage rates and rising home prices could continue to dampen sales in the months ahead.
