Realtor Rebecca Van Camp places a “Sold” sign on her sign in front of a home in Meridian, Idaho on Wednesday, October 21, 2020.
Darin Oswald | Tribune News Service | Getty Images
Existing homes are selling at the slowest pace since September 2012, except for a brief dip at the start of the Covid 19 pandemic.
Sales of previously owned homes fell 1.5% in September from August to a seasonally adjusted annual rate of 4.71 million units, according to a monthly survey by the National Association of Realtors.
This marked the eighth consecutive month of declining sales. Sales were down 23.8% year over year.
The sharp rise in mortgage rates causes a sharp slowdown in the housing market. The average 30-year fixed-rate mortgage rate is now slightly above 7%, after having started around 3% this year. This makes an already expensive housing market even less affordable.
Despite the slowdown in sales, inventories continue to fall. There were 1.25 million homes for sale at the end of September, down 0.8% from September 2021. At the current rate of sales, that represents 3.2 months of supply. Six months is considered a balanced supply.
“Despite weaker sales, several offers are still on the way, with more than a quarter of homes selling above list price due to limited inventory,” said Lawrence Yun, chief economist at NAR. “The current lack of supply underscores the vast contrast to the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”
Tighter supply continues to put pressure on house prices. The median price of an existing home sold in September was $384,800, an 8.4% increase from September 2021. Prices climbed at all price points. That’s 127 consecutive months of annual increases.
Prices are cooling though. September marked the third consecutive month-over-month decline in prices, which typically falls at this time of year.
However, they are falling harder this year, especially at the bottom of the market, where stocks are much thinner. Homes priced between $100,000 and $250,000 fell 28.4% from a year ago, while sales of homes priced between $750,000 and $1 million dollars decreased by 9.5%.
Homes stayed on the market a bit longer in September, an average of 19 days, compared to 16 days in August and 17 days in September 2021.
Higher mortgage rates don’t just scare off potential buyers. They are also keeping sellers on the sidelines, adding to the inventory crisis.
“Homeowners love their 3% mortgage rate and they don’t want to give it up,” Yun said.