U.S. Existing Home Sales Plummet to Lowest Level Since 2010
In September, existing home sales in the U.S. fell to their lowest level in 14 years, reaching a significant low despite a slight increase in housing inventory. High mortgage rates deterred potential buyers. According to the National Association of Realtors, sales dropped by 1.0%, reaching a seasonally adjusted annual rate of 3.84 million units, the lowest since October 2010. This figure fell short of economists’ expectations that anticipated home resales to remain steady at 3.86 million units.
On an annual basis, home resales fell by 3.5% in September. The market has been under pressure since the rise in mortgage rates last spring and has yet to exhibit a significant recovery. Although mortgage rates declined briefly following Federal Reserve rate cuts last month, they have risen again over the past three weeks. This increase has been linked to strong economic indicators such as retail sales and national account revisions, leading traders to reduce expectations for significant rate cuts next month.
The National Association of Realtors suggested that the upcoming presidential election on November 5 might cause potential homeowners to delay purchases, though there is no concrete evidence supporting this claim. NAR's chief economist, Lawrence Yun, noted that consumers face more inventory options, slightly lower mortgage rates compared to last year, and ongoing job growth, but some may be waiting for the election outcome before making such a substantial financial decision.
In September, housing inventory increased by 1.5% to 1.39 million units, the highest level since October 2020, representing a 23.0% increase from last year. Despite the rise in supply, the median home price rose by 3.0% year-on-year to $404,500, with all four U.S. regions recording price increases.
At the current sales pace, it would take 4.3 months to deplete the existing inventory, the longest since May 2020 and longer than the 3.4 months recorded last year. A balanced market is typically characterized by an inventory of four to seven months.
In September, homes stayed on the market for an average of 28 days, longer than the 21 days of last year. First-time buyers accounted for 26% of sales, slightly lower than last year’s 27% and still below the 40% benchmark that experts view as indicative of a healthy housing market. Cash transactions made up 30% of sales, a marginal increase from last year's 29%. Distressed sales, including foreclosures, accounted for just 2% of transactions, similar to last year's figures.