Existing Home Sales Slumped To Lowest in Nearly 14 Years in September

The housing market stayed stuck in neutral in September, as sales of existing homes edged down to their slowest pace since 2010.

Homes sold at a seasonally-adjusted annual rate of 3.84 million in September, down 1% from August and decelerating to the slowest pace since October 2010, the National Association of Realtors said Wednesday. The figures were in line with forecasters’ expectations, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.

Sales slumped despite the fact that for-sale listings increased. The 1.39 million homes for sale in September were the most since October 2020 and up 1.5% from August, though still below typical pre-pandemic levels.

Lower mortgage rates also weren’t enough to entice buyers. The average rate offered for a 30-year fixed mortgage was 6.35% the first week in September, compared to rates well over 7% the year before. Normally, those conditions would be expected to spur a rebound in home sales, especially given that would-be buyers have been supported by a still-healthy job market, Lawrence Yun, chief economist at the association, said in a press release.

“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” Yun said. “There are more inventory choices for consumers, lower mortgage rates than a year ago and continued job additions to the economy.”

“Perhaps some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” he said.

Buyers have plenty of reasons to be wary about financial commitments ahead of the toss-up presidential election which could have major economic and housing policy consequences. The two candidates have starkly different approaches to solving the nation’s longstanding housing shortage. Republican and former president Donald Trump has pledged to free up housing for others by deporting immigrants, while Vice President Kamala Harris, a Democrat, has proposed a $25,000 tax credit for first-time buyers.

Buyers Want Homes, But Many Still Can’t Afford Them

Another factor holding back sales is affordability.

Home prices continued to rise, with the median home selling for $404,500, up 3% from the year before. However, Yun noted this was less than the 4.5% increase in average hourly earnings over the same period, suggesting that homes may actually be getting easier to purchase.

Trends in the housing market may be laying the groundwork for a break in the deadlock that has defined the homebuying situation for more than a year. Because mortgage rates are so much higher than the ultra-low ones available during the pandemic, sellers have been reluctant to put their homes on the market, leading to low inventory and upward pressure on prices.

In recent months, mortgage rates have fallen, coinciding with an uptick in inventory, as financial markets anticipated the Federal Reserve reducing the influential fed funds rate, rolling back the high rates it had maintained to fight inflation.

However, since the Fed cut rates in September, mortgage rates have risen. Forecasters still expect mortgage rates to go down as the year goes on and the Fed continues to cut the fed funds rate. However, the path downward could be bumpy; in the meantime, many buyers remain priced out of the market.

“We do have this large social divide with property owners getting the wealth gains, but non-property owners really frustrated about getting into the market,” Yun said on a conference call with reporters.