US previously-owned home sales fell to the lowest level since 2010 in September, as affordability declined even further.
On Thursday, the National Association of Realtors (NAR) released data showing that contract closings were down 2% month over month, to an annualized pace of 3.96 million. In a Bloomberg survey of economists, it was forecast to come in at 3.89 million.
On an unadjusted basis, sales had declined almost 19% from one year earlier.
Decades-high mortgage rates have maintained the resale market in a historically depressed state. Even as prospective buyers are driven to the sideline, homeowners with pre-existing mortgages with locked-in rates are incentivized to not move to avoid being priced into higher rates on new mortgages, and that has depressed inventories even more, forcing prices higher.
Lawrence Yun, NAR’s chief economist said, “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales. The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”
The median selling price of a home increased 2.8% from one year prior, reaching $394,300, a record for September prices. In August the measure of housing affordability in another NAR survey dropped to the lowest level since 1989.
Yun noted that roughly a quarter of homes were selling for above their list price last month, which would indicate that many sales, especially of starter homes, are encountering multiple offers. He added that some buyers who have grown frustrated after losing out on bidding wars, are now forgoing requirements like home inspections and appraisals, in an effort to get their offers accepted.
Total number of homes for sale increased, to 1.13 million, however it was still the lowest number for September data going back to 1999. At the current rate of sales, it would require 3.4 months to sell all of the properties on the market, a slight increase from the month prior. Realtors say that anything under five months is considered a tight market.
According to the NAR report, 69% of sold homes were only listed for sale for under one month before selling. In September, listings remained on the market for an average of 21 days, which was a slight increase from the month before.
Existing home sales form the bulk of US housing, and are measured at the contract closing. Data on the remainder of US housing, made up of new home sales based on contract signings, will come out next week.
