In September 2023, the sale of previously owned homes saw a minor dip of 1%, resulting in an annualized pace of approximately 3.84 million units, a rate not witnessed since October 2010. This data, reported by the National Association of Realtors, reveals a concerning trend, as the sales volume not only decreased from August but also reflected a 3.5% decline year-over-year. Such stagnation in the housing market echoes a broader economic narrative, indicating possible hurdles for buyers and sellers alike.
The slowdown in home sales was notable across most regions in the United States, with only the West registering any significant gains. This regional discrepancy could point to variations in local economies or market conditions, emphasizing how diverse and complex the U.S. real estate market is. Stronger local job markets, higher wages, or specific housing initiatives may have contributed to the relative success in the West. However, the overall decline raises questions about consumer confidence and purchasing power nationwide.
Mortgage rates have played a crucial role in shaping home sales over the past few months. Starting at nearly 7% in July for 30-year fixed rates, the trend declined steadily, reaching just below 6.5% by late August. Notably, these rates are over a percentage point lower than the previous year, yet the anticipated boost in sales aligning with lower mortgage costs has not materialized. Lawrence Yun, the chief economist for the National Association of Realtors, suggests this stagnation results from several market characteristics that typically spur higher sales.
As the market faces persistently low inventory levels, the total number of homes available for sale increased by 1.5% in September, resulting in a stock of 1.39 million homes. This translated into a 4.3-month supply, a modest improvement signaling more options for potential buyers. Notably, this also represents a substantial 23% increase compared to the same time last year. While the increase in inventory is a boon, it is essential to note that the availability of distressed properties remains alarmingly low, as indicated by the mortgage delinquency rates.
Despite the slight increase in available inventory, prices continue to rise due to enduring demand. The median price of existing homes reached $404,500, marking a 3% increase from the previous year. This marks the 15th consecutive month of price increases, highlighting a market where affordability challenges persist. Notably, cash transactions constituted 30% of the sales, contrasting sharply with pre-COVID levels where cash buyers accounted for only about 20%. This shift emphasizes the growing reliance on cash, driven not only by investors but also by traditional buyers seeking stability in a fluctuating market.
First-time homebuyers are facing an uphill battle, comprising just 26% of total sales in September. The increasing difficulty of accessing the market amidst rising prices and competition from cash buyers indicates a potential long-term issue for the housing sector. As these buyers struggle to gain a foothold, it raises important questions about the future of homeownership and the demographic trends shaping residential real estate.
While some indicators suggest opportunities within the housing market, the overall picture reveals significant challenges needing to be addressed for a more robust recovery.