In September, home sales fell 2 percent from August and reached their lowest annual pace since October 2010, sunk by steadily rising interest rates through this year. Sales for the month declined 15.4 percent from the same month in 2022.
For all of 2023, sales of existing homes are projected to be the fewest since 2011, The Wall Street Journal reported.
The median national selling price of an existing home rose at an annual rate of 2.8 percent last month to $394,300, according to the National Association of Realtors (NAR). That marks the highest price for any September since 1999 when the NAR began tracking price changes. Prices are not adjusted for inflation.
“People are priced out” of the housing market, NAR chief economist Lawrence Yun said in a statement accompanying the release of September’s numbers. “Limited inventory and rising interest rates continue to hinder the home sales market.”
The paralyzed housing market is one of the most direct results of the U.S. Federal Reserve’s campaign to raise interest rates to combat inflation. The central bank’s rates now stand at their highest in 22 years.
The year’s fourth quarter is “the slowest part of the year in terms of home purchases and that’s made more so by the spike in interest rates,” Michael Fratantoni, the Mortgage Bankers Association’s (MBA’s) chief economist, told the WSJ.
During the week ending 13 October, mortgage applications plunged to their lowest weekly number since 1995, the MBA noted.
On 30 September, there were 1.13 million homes for sale or under contract, 2.7 percent more than at the end of August but 8.1 percent fewer than on the same date a year earlier, the NAR said, the fewest on that date since at least 1999.
That left a three- to four-month inventory of homes for sale, the NAR calculated. A six-month inventory is considered a balanced market that gives buyers and sellers equal negotiating leverage.
TREND FORECAST: Home sales will not recover, nor will the market reopen the possibility of home ownership to larger numbers of low- and middle-income households, until mortgage interest rates fall and remain below 4.5 percent and the U.S. economy recovers from the coming recession.