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High mortgage rates continued to weigh on home sales last month, according to a report from the National Association of Realtors (NAR), with existing home sales falling for the eighth straight month in September.
Lawrence Yun, the chief economist at NAR, said: “As interest rates continue to rise, the housing sector continues to adjust, surpassing 6% on 30-year mortgages in September and now approaching 7%.”
In particular, high-priced areas across the country will be hit hard and sales will drop,” he said.
Sales of single-family homes, condos, condos, and co-ops fell 1.5 percent from August to September, according to the report, with three of the nation’s four largest regions falling monthly.
The seasonally adjusted sales rate of existing home sales also declined year-over-year in all regions.
Home sales fell 23.8 percent to 4.71 million in September 2021 from 6.18 million in September 2021, according to the NAR.
It was the 13th consecutive month of declines in annual home sales nationwide. Excluding the downturn during the pandemic, existing home sales are now at their lowest level since 2014, and home sales are expected to continue to decline in the coming months.
“Existing home sales are being hurt by high mortgage rates,” real estate analyst Bill McBride said in a statement Thursday. “We expect a further decline in sales later this year as rates rose sharply in October and this affects our closed sales in November and December.”
According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage was 6.11 percent in September, up from 5.22 percent the previous month. On the other hand, the average for 2021 was 2.96%.
While high mortgage interest rates have hurt existing home sales, home price growth over the past 127 months (about 10.5 years) may also have played a role. According to the NAR, the September median home price is $384,800 for all types of existing homes.
That’s an 8.4% increase from September 2021, when the median home price was $355,100. In May 2021, the average annual rate of price change reached 25.2%.
However, in recent months, the average monthly trend of house price growth has changed. September was the third straight month in which average sales prices fell, according to the report.
NAR cites persistent seasonal price trends as the reason for the decline in average home prices.
Home inventory also fell slightly to 1.28 million in the previous month, from 1.25 million in September. According to NAR, these inventory declines may be due at least in part to seasonal declines that typically occur in December and January.
The proposed month was unchanged at 3.2 months from August to September. According to the ANR, the region with the biggest decline in existing home sales was the South, where home sales in August and September fell by 1.9% and 23.8% compared to the same period last year.
Home sales in the Midwest also fell 1.7% from the previous month and 19.7% from September 2021. Sales in the Northeast region also fell by 1.6% from August to September 2021 and by 18.7% since September.
The West was the only region where home sales did not decline month over month. Home sales in the West were flat from August to September but fell 31.3% year over year.
Home sales and inventory have declined across most of the country, but the upward trend in home sales continues, Yoon said.
“Despite slow sales, there are still many listings and more than a quarter of homes are selling above list price due to limited inventory,” Yoon said.
“The current supply shortage is in stark contrast to the major market downturn from 2008 to 2010 when inventory levels have doubled today.”
Reference Source: Housing Wire
