Home sales dropped in September to the lowest level in 13 years as surging interest rates and climbing home prices made buying a home unattainable for a growing share of would-be buyers.
Historically low inventory of homes for sale continued to push prices up and rates that crossed over 7% in August put a damper on sales, according to a monthly report from the National Association of Realtors.
The median price for existing homes — which include single-family homes, townhomes, condominiums and co-ops — was $394,300 last month. That was up 2.8% from a year ago and marked the third consecutive month of year-over-year price increases, setting a record high price for homes in September. Prices rose in all four regions of the country, the Northeast, Midwest, South and the West, the NAR report found.
“For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply,” Lawrence Yun, NAR chief economist said.
Low inventory and high prices contributed to sales of existing homes dropping 2% from August to September to a seasonally adjusted annual rate of 3.96 million units, just beating analysts’ expectations.
Annually, September sales were down 15.4% from a year ago when the sales pace was 4.68 million units.
“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said Yun. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”
With the Fed indicating its benchmark rate will stay “higher for longer,” and mortgage rates staying higher as well, analysts expect more monthly drops in home sales through the rest of the year.
“We thought at the beginning of the year that sales would be down 10% or 15% for the year,” said Yun. “It will be more like a 20% from last year.”
This is a developing story and will be updated.
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