Existing Home Sales Fall 8th Straight Month

Existing home sales fell again in September, marking eight consecutive months of monthly declines, the National Association of Realtors reported Thursday.

NAR said total existing home sales (https://www.nar.realtor/existing-home-sales) fell by 1.5% from August to a seasonally adjusted annual rate of 4.71 million. Year-over-year, sales fell by 23.8% (down from 6.18 million in September 2021).

Single-family home sales fell to a seasonally adjusted annual rate of 4.22 million in September, down 0.9% from 4.26 million in August and down 23.0% from a year ago. The median existing single-family home price rose to $391,000 in September, up 8.1% from September 2021. Existing condominium and co-op sales fell to a seasonally adjusted annual rate of 490,000 units in September, down 5.8% from August and 30.0% from one year ago. The median existing condo price rose to $331,700 in September, an annual increase of 9.8%.

Regionally, sales fell everywhere except the West, unchanged in September at 880,000 units but down by 31.3 percent from a year ago. The median price in the West rose to $595,400, a 7.1% increase from a year ago.

In the South, sales fell by 1.9% in September from August to an annual rate of 2,080,000, and fell by 23.8% from a year ago. The median price in the South rose to $351,700, an increase of 11.8% from a year ago. In the Midwest, sales fell by1.7% from August 1,140,000 in September and fell by 19.7% from a year ago. The median price in the Midwest rose to $281,500, up 6.9% from a year ago. In the Northeast, sales fell by 1.6% from August to 610,000 units in September and fell by 18.7% from a year ago. The median price in the Northeast rose to $418,500, an increase of 8.3% from one year ago.

Total housing inventory fell to 1.25 million units as of September, down 2.3% from August and 0.8% from the previous year. Unsold inventory sits at a 3.2-month supply at the current sales pace – unchanged from August and up from 2.4 months a year ago.

The median existing-home price for all housing types in September rose to $384,800, an 8.4% jump from a year ago ($355,100), as prices climbed in all regions. This marks 127 consecutive months of year-over-year increases, the longest-running streak on record. It was the third month in a row, however, that the median sales price faded after reaching a record high of $413,800 in June, the usual seasonal trend of prices trailing off after peaking in the early summer.

“Excluding the early months of the pandemic when home-buying came to grinding halt, September’s pace is the slowest since September 2012,” said Charlie Dougherty, Economist with Wells Fargo Economics, Charlotte, N.C. “Mortgage rates have risen sharply this year as the Fed has aggressively tightened monetary policy in order to tamp down inflation. The rapid move up in financing costs has greatly reduced affordability for buyers and locked in homeowners who hold lower mortgage rates, bringing home buying and selling to a virtual standstill.”

Dougherty cautioned existing home sales are likely to decline further in the months ahead. “Daily mortgage rate averages are now above 7%,” he said. “The recent uptick in financing costs has led to even more pull back in mortgage applications for purchase, which have now declined for four straight weeks through October 14.”

“The housing sector continues to undergo an adjustment due to the continuous rise in interest rates,” said NAR Chief Economist Lawrence Yun. “Expensive regions of the country are especially feeling the pinch and seeing larger declines in sales. “Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory. “The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”

NAR said properties typically remained on the market for 19 days in September, up from 16 days in August and 17 days a year ago. Seventy percent of homes sold in September were on the market for less than a month.

First-time buyers represented 29% of sales in September, unchanged from August and slightly higher than 28% a year ago. All-cash sales accounted for 22% of transactions in September, down from 24% in August and 23% a year ago.

Individual investors or second-home buyers purchased 15% of homes in September, down from 16% in August, but up from 13% a year ago.

Distressed sales represented 2% of sales in September, a marginal increase from 1% in August 2022 and September 2021.