After two straight months of growth, existing-home sales took a step back in September, according to data from the National Association of Realtors (NAR).
NAR reported a seasonally adjusted annual rate of 5.38 million homes sold last month, down 2.2 percentage points from August.
The major culprit for the retreat? Persistently low supply which, according to NAR chief economist Lawrence Yun, continues to negatively counteract historically low mortgage rates.
“We must continue to beat the drum for more inventory,” Yun said. “Home prices are rising too rapidly because of the housing shortage and this lack of inventory is preventing home-sales growth potential.”
Housing inventory at the end of September was 1.83 million units, roughly the same as August 2019 but down 2.7 percentage points from September 2018. Unsold inventory is at 4.1 months of supply at the current sales pace, up marginally from 4.0 months in August of this year, but down from 4.4 months in September of last year.
All four of the country’s major regions as defined by NAR took month-over-month sales hits in September, with the Midwest seeing the largest drop at 3.1 percentage points. The Northeast retreated by 2.8 percentage points, while the South fell by 2.1 points and the West declined by 0.9 points.
Despite the monthly decline, year-to-date sales remain up 3.9% compared to the same period last year. The aforementioned rate environment, while fighting against supply constraints, is enticing buyers into the market.
“For families on the sidelines thinking about buying a home, current rates are making the climate extremely favorable in markets across the country,” NAR President John Smaby said. “These traditionally low rates make it that much easier to qualify for a mortgage and they also open up various housing selections to buyers everywhere.”
“Mortgage rates under 4% are amazingly attractive for homebuyers,” Yun said. “The rise in foot traffic as evidenced by the open rates of SentriLock key boxes shows growing buyer interest.”
Existing-home prices continued to rise year over year in September, ending the month at a median price of $272,100 among all housing types. That’s up 5.9% from September 2018, marking the 91st consecutive month of year-over-year gains. Properties typically stayed on the market for 32 days, up from 31 days in August of this year and unchanged from September of last year. Forty-nine percent of homes that sold in September were on the market for less than a month.