The National Association of Realtors recently reported that sales of previously owned homes in the United States declined by 1% in September compared to the previous month, marking a seasonally adjusted annualized rate of 3.84 million units—the slowest rate recorded since October 2010. Moreover, these figures indicate a more troubling trend as they reflect a 3.5% decrease compared to September 2022. This decline raises concerns about the overall health of the housing market, particularly as it points to persistent challenges that homeowners and potential buyers are facing.
The sales data show that three out of the four U.S. regions experienced a drop in home sales, with only the West region recording a slight increase. This uneven recovery highlights how regional markets are responding differently to economic pressures. The decline in sales suggests that buyers are hesitant, possibly due to elevated mortgage rates and other financial constraints. The figures for September, which likely reflect buyer behavior influenced by contracts signed in July and August, indicate that consumer confidence in the housing market might be wavering.
Despite the fluctuations, mortgage rates have seen some stabilization. Beginning in July, the 30-year fixed mortgage rate was around 7%, only to slowly dip to just below 6.5% through August. Although current rates are over a percentage point lower than the same time last year, they continue to influence buyers’ decisions, resulting in a stagnant sales pace. Lawrence Yun, the National Association of Realtors’ chief economist, noted that home sales have remained around the four-million-unit mark for the past year, indicating a persistent stalemate despite traditionally favorable conditions for buyers.
In September, inventory rose by 1.5% month-over-month to reach 1.39 million homes for sale, denoting a 4.3-month supply at the current selling pace. This increase is relatively beneficial for buyers, as it enhances their options when choosing properties. Nonetheless, the overall supply remains constrained, particularly with a minimal number of distressed properties available due to low mortgage delinquency rates. These distressed sales accounted for only 2% of all transactions in September, underscoring a lack of urgency among homeowners facing financial challenges.
The ongoing pressure of limited inventory has contributed to rising home prices, with the median price of an existing home sold in September hitting $404,500—an increase of 3% from the previous year. This constitutes the 15th consecutive month of price gains, painting a mixed picture for consumers who face both heightened competition and soaring costs. The dominance of cash sales, which represented 30% of all sales in September—up from around 20% prior to the pandemic—further complicates matters for first-time homebuyers, who comprised only 26% of September sales, indicating a retreat in this essential demographic.
Despite the slight uptick in inventory, the current housing market landscape is riddled with challenges. The increase in prices and prolonged average days on the market—which have risen to 28 days compared to 21 days a year ago—reflects an ongoing struggle to balance supply and demand effectively. As the market evolves, potential homebuyers and policymakers alike must grapple with these dynamics to create a more accessible housing market moving forward.