Existing home sales plunged to their lowest level in 13 years in September as buyers remained shackled to the sidelines, according to the National Association of Realtors (NAR).
Scarce resale supply and sky-high interest rates have combined to continue the stubborn affordability crisis, holding September’s existing home sales to a seasonally adjusted annual rate of 3.96 million units. That’s the slowest pace since October 2010 and was down 2.0% month over month, marking the fourth straight monthly decline. The backtrack was broad-based, as single-family sales retreated 1.9% month over month, while condos and co-ops slowed 2.3%.
Resales continue to slump on an annual basis, with September’s figure down 15.4% year over year. Sales still managed to beat consensus expectations, as a Reuters poll of economists projected September home sales at a pace of 3.89 million units.
Existing home sales appear to be set to lag in the near-term, with the most recent data from the Mortgage Bankers Association revealing that applications for purchase mortgages have recently plummeted to their lowest level since February 1995.
“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said NAR chief economist Lawrence Yun. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”
The lock-in effect from high mortgage rates remains a key factor in keeping existing home supply at a noteworthy low. Total housing inventory, according to the NAR, was at 1.13 million units at the end of September. That’s up 2.7% from August, but down 8.1% from September 2022.
At the current sales pace, there is a 3.4-month supply of unsold inventory, up from 3.3 months in August and 3.2 months from September last year.
Low inventory is also putting upward pressure on home prices despite the lack of sales. The median existing home price in September was $394,200, up 2.8% year over year.
“For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply,” said Yun.