Home sales fall below 4 million for the first time in 13 years
The summer sales slump continued through September, marking the seventh month of negative sales movement this year.
- The seasonally adjusted annual rate of existing home sales fell to 3.96 million in September.
- NAR reported that existing home sales slid 2% month-over-month and dropped 15.4% from the same period last year.
- Economists point to high borrowing rates and low affordability as major reasons for the decline.
Another month, another dip in existing home sales. The inventory crunch that caused a summer sales slump appears to have only gotten worse in September.
According to the latest existing home sales report from the National Association of Realtors, closed deals on existing homes slid 2% last month and fell a noticeable 15.4% from the same period a year ago.
In September, there was a seasonally adjusted annual rate of 3.96 million existing home sales, marking the first time since October 2010 that existing home sales have dropped below the 4 million threshold, noted Danielle Hale, chief economist at Realtor.com. The annual rate for homes sales in August was 4.04 million.
The September slide represents the seventh month of negative movement for existing home sales this year. February and May were the only two months where existing home sales improved from the previous month.
Home prices also dipped from August. The median sale price for existing homes was $394,300 in September, down from $407,100 the previous month. On an annual basis, however, prices improved 2.8% from the $383,500 median in September 2022.
Inventory went in the reverse direction: It was up 2.7% from last month but down more than 8% compared to a year ago.
Economists point to persistently high mortgage rates and low affordability as culprits for the dip in sales.
"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 the report, adding that the "Federal Reserve simply cannot keep raising interest rates" as the economy softens.
Still, there could be one more Fed rate hike this year, Chair Jerome Powell hinted last month.
Hale noted that despite the decline, sales may have actually seen a small boost in September, and predicts they could now slow even further.
"Although affordability is a headwind, the renewed upward energy in mortgage rates that followed the Fed's September projections might have prompted some shoppers to rush to the closing table, lest they face higher borrowing costs and even worse affordability in the months ahead," she said.
"If so, this could mean an even bigger lull in sales activity in the coming months."