Home Sales Hit 13-Year Low Amidst Escalating Interest Rates and Soaring Prices

 


In a stark turn of events, September witnessed the lowest level of home sales in over a decade, as skyrocketing interest rates and escalating home prices rendered homeownership increasingly out of reach for a growing segment of potential buyers.


The monthly report from the National Association of Realtors (NAR) underscored that historically low inventory of homes for sale continued to exert upward pressure on prices, while interest rates, which breached the 7% mark in August, cast a shadow on sales.


The median price for existing homes, encompassing single-family residences, townhouses, condominiums, and co-ops, stood at $394,300 last month. This represented a 2.8% surge from the previous year, marking the third consecutive month of year-over-year price hikes and establishing a record high for September. The NAR report further highlighted price upticks in all regions of the country — the Northeast, Midwest, South, and the West.


NAR Chief Economist, Lawrence Yun, remarked, "For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply."


The combination of low inventory and elevated prices contributed to a 2% decline in existing home sales from August to September, resulting in a seasonally adjusted annual rate of 3.96 million units, narrowly surpassing analysts' projections.


On an annual basis, September sales demonstrated a sharp drop of 15.4% compared to the preceding year, when the sales pace reached 4.68 million units.


Yun emphasized, "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."


With the Federal Reserve signaling a prolonged period of elevated benchmark rates and mortgage rates following suit, experts anticipate further monthly declines in home sales throughout the remainder of the year.


"We thought at the beginning of the year that sales would be down 10% or 15% for the year," noted Yun. "It will be more like a 20% from last year."