A shift is occurring in many housing markets. Affordability may be prompting more potential buyers to pause due to rising mortgage rates over the last few weeks, and home sellers are now facing more competition. Homeowners may no longer be able to expect the quick sale they’ve seen their neighbors get in the past.
The number of For Sale signs is starting to increase across the country. Unsold inventory is at a 4.4-month supply at the current sales pace. Inventories were at 1.88 million in September, up slightly from 1.86 million a year ago, according to the National Association of REALTORS®’ latest housing report, released Friday.
“There is a clear shift in the market with another month of rising inventory on a year-over-year basis, though seasonal factors are leading to a third straight month of declining inventory,” says Lawrence Yun, NAR’s chief economist. “Homes will take a bit longer to sell compared to the super-heated fast pace that we saw earlier this year.”
Existing-home sales declined in September, with all four major regions of the country seeing no gains in sales activity last month, according to NAR’s report. Total existing home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 3.4 percent in September compared to August, and are now at a seasonally adjusted annual rate of 5.15 million. Sales are down 4.1 percent from a year ago.
“This is the lowest existing home sale level since November 2015,” says Yun. “Decades-high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”
The 30-year fixed-rate mortgage has jumped from an average of 3.99 percent in 2017 to an average of 4.63 percent in September. Freddie Mac reported this week that rates are averaging 4.85 percent.
“Rising interest rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory,” Yun says.
Here’s a closer look at some key housing indicators from NAR’s latest report:
- Home prices: The median existing-home price for all housing types was $258,100 in September, a 4.2 percent increase compared to a year ago.
- Days on the market: Forty-seven percent of homes sold in September were on the market for less than a month. Properties stayed on the market an average of 32 days in September, down from 34 days a year ago.
- All-cash sales: All-cash transactions comprised 21 percent of real estate sales in September, up from 20 percent a year ago. Individual investors tend to make up the biggest bulk of cash sales. They purchased 13 percent of homes in September, down from 15 percent a year ago.
- Distressed sales: Foreclosures and short sales made up 3 percent of sales in September, which is the lowest since NAR began tracking such data in October 2008. Broken out, 2 percent of sales in September were foreclosures and 1 percent were short sales.