Home Blog Uncategorized September Records Lowest Home Sales Levels Since the Foreclosure Crisis
September Records Lowest Home Sales Levels Since the Foreclosure Crisis

September Records Lowest Home Sales Levels Since the Foreclosure Crisis

In the month of September, sales of previously owned homes experienced a decline of 2% in comparison to August, resulting in a seasonally adjusted annualized rate of 3.96 million units, as reported by the National Association of Realtors. This figure represents a 15.4% decrease when compared to September 2022.

It is worth noting that this marks the slowest sales pace since October 2010, a period during the Great Recession when the housing market was grappling with a foreclosure crisis. To offer a contrasting perspective, just two years ago, when mortgage rates were at around 3%, the housing market was witnessing a robust pace of 6.6 million home sales. Currently, the average rate on the 30-year fixed mortgage stands at approximately 8%, according to data from Mortgage News Daily.

Lawrence Yun, the Chief Economist at the National Association of Realtors, underscored the persistent challenges facing the real estate market, stating, “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales. The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”

By the end of September, the number of homes available for sale stood at 1.13 million, reflecting a decrease of more than 8% compared to the previous year. Consequently, inventory now represents a 3.4-month supply, a slight improvement over the prior year, primarily due to the significant drop in sales volume. This supply metric is calculated based on the current sales pace.

In addition to the upward pressure exerted by mortgage rate hikes, the median price of homes sold in September reached $394,300, indicating a 2.8% year-over-year increase. A striking 26% of homes sold above their list prices, which can be attributed to the scarcity of available properties leading to competitive bidding scenarios.

First-time homebuyers constituted only 27% of all sales, a notable deviation from historical averages, which typically see them accounting for approximately 40% of sales.

While sales exhibited declines across all price points, the high-end market segment experienced the smallest reduction. This phenomenon is primarily attributable to the greater availability of properties in the higher price ranges, and the fact that buyers in this segment often have the means to make all-cash purchases. Notably, mortgage demand has reached its lowest point since 1995, according to data from the Mortgage Bankers Association.

Notably, all-cash transactions represented 29% of all sales in September, marking an increase from 27% in August and a more substantial growth from 22% in the corresponding period of the previous year.

Danielle Hale, Chief Economist for Realtor.com, observed, “Although affordability is a headwind, the renewed upward energy that followed the Fed’s September projections might have prompted some shoppers to rush to the closing table, lest they face higher mortgage rates and even worse affordability in the months ahead. If so, this could mean a bigger lull in sales activity in the coming months.”

Sign up to receive the latest updates and news