Home Sales Plummet to Lowest Level in Nearly 13 Years
The housing market experiences a sharp downturn as home sales hit their lowest point in nearly 13 years. Rising mortgage rates and a decrease in homeowner willingness to sell contribute to this decline. Prices continue to rise, but at a slower rate t...
Troy D. Hanson
October 19, 2023
The housing market took a sharp downturn in September, with home sales hitting their lowest point in almost 13 years. According to the National Association of Realtors, the seasonally adjusted annual rate of previously owned homes sold last month was 3.96 million, a 2% drop from August and the slowest rate since October 2010. This decline can be attributed to both rising mortgage rates and a decrease in homeowner willingness to sell.
Sales Decline, But Prices Rise
While sales did fall, prices continued to rise compared to last year. The median existing home sold for $394,300, indicating a 2.8% increase from the previous year. However, it is worth noting that this price growth occurred at a slower rate than in August.
Inventory Shortage and Affordability Challenges
Limited inventory and low housing affordability have remained persistent obstacles throughout the year, hindering home sales. Lawrence Yun, the chief economist of the National Association of Realtors, emphasized this issue and stated that if mortgage rates were to reach 8% in the near-term, they could remain at that level for the remainder of the year.
Record-High Mortgage Rates
Mortgage rates have been steadily climbing, reaching their highest level in 23 years. On Wednesday, rates measured by Mortgage News Daily hit 8%. Freddie Mac's weekly survey will reveal the most recent mortgage rate data on Thursday. Last week, the average 30-year fixed mortgage rate stood at 7.57%.
Potential Future Impact on Home Sales
The true impact of rising rates on home sales has yet to be fully seen in monthly sales data. Recent reports from the Mortgage Bankers Association indicate that home loan applications have dropped to their lowest level since 1995.
Projections for Existing-Home Sales
Based on current trends, Redfin, a real estate brokerage, anticipates that this year's existing-home sales total will be the lowest since 2008.
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