Real estate broker Rebecca Van Camp places a “Sold” sign on her sign in front of a home in Meridian, Idaho, Wednesday, Oct. 21, 2020.
Darin Oswald | Tribune News Service | fake images
Existing homes are selling at the slowest rate since September 2012, with the exception of a brief dip in early the covid19 pandemic.
Existing home sales 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.
That marked the eighth straight month of sales declines. Sales were down 23.8% year over year.
Markedly higher mortgage rates are causing an abrupt slowdown in the housing market. The average 30-year fixed mortgage loan rate is now just over 7%, after starting this year at around 3%. That is making an already expensive housing market even less affordable.
Despite the slowdown in sales, inventory continues 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 a 3.2-month supply. Six months is considered a balanced supply.
“Despite weaker sales, multiple offers are still taking place with more than a quarter of homes selling above list price due to limited inventory,” said Lawrence Yun, chief economist at the NAR. “The current lack of supply underscores the stark contrast to the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”
The tight supply continues to put pressure on home prices. The median price of an existing home sold in September was $384,800, an increase of 8.4% from September 2021. Prices were up at all price points. This makes 127 consecutive months of annual increases.
However, prices are cooling. September marked the third consecutive month-on-month price drop, which typically falls at this time of year.
However, they are falling the hardest this year, particularly at the lower end of the market, where inventory is much tighter. Homes priced between $100,000 and $250,000 were down 28.4% from a year earlier, while sales of homes priced between $750,000 and $1 million were down 9.5%.
Homes stayed on the market slightly 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 also keep vendors on the sidelines, adding to inventory shortages.
“Homeowners love their 3% mortgage rate and don’t want to give that up,” Yun said.
