Existing-Home Sales Fall 1% in September, a 14-Year Low -

Introduction

The U.S. housing market faced a slowdown in September 2024, marking the lowest existing-home sales level in 14 years. According to the National Association of REALTORS® (NAR), total existing-home sales—encompassing single-family homes, townhomes, condominiums, and co-ops—declined by 1% from August, settling at a seasonally adjusted annual rate of 3.84 million. Year-over-year, sales fell by 3.5%, down from 3.98 million in September 2023. This drop in sales indicates a cautious stance among buyers as they wait for more favorable mortgage rates amid high home prices.

Regional Sales Breakdown

Sales dipped month-over-month and year-over-year in three of the four U.S. regions—South, Midwest, and Northeast. However, the West experienced growth, showcasing regional disparities in market dynamics.

What’s Behind the Decline?

According to NAR Chief Economist Lawrence Yun, home sales have remained at a consistent pace of around 4 million units over the last 12 months. The key factors contributing to the recent downturn include:

Rising Mortgage Rates: Prospective buyers are hesitating due to higher borrowing costs, creating uncertainty in home affordability.
High Home Prices: Elevated home prices have further deterred potential buyers.
Upcoming Presidential Election: Yun notes that political uncertainty can make consumers cautious about major financial decisions, including purchasing homes.

Inventory Insights

Despite the decline in sales, housing inventory saw a boost in September, with 1.39 million units available—a 1.5% increase from August and a 23% rise from September 2023. The current unsold inventory sits at a 4.3-month supply, slightly up from August’s 4.2-month supply. Yun emphasizes that increased inventory is good news for buyers, providing more options in the market. However, distressed properties remain minimal due to low mortgage delinquency rates, accounting for just 2% of total transactions.

Price Trends and Affordability

The median existing-home price rose to $404,500 in September, a 3% increase from $392,700 a year earlier. While price moderation is a positive sign for buyers, affordability remains a significant challenge. Bright MLS Chief Economist Lisa Sturtevant predicts that while mortgage rates may decline toward the end of the year, overall affordability will still be a concern for many potential buyers.

What’s Next for the Housing Market?

More Inventory, Lower Rates: Sturtevant foresees more new listings and a decrease in mortgage rates as the year progresses, potentially leading to a surge in buying and selling activity in the fourth quarter.
Political Factors: With the presidential election approaching, uncertainty could impact the housing market’s momentum. Buyers and sellers might pause transactions until clearer political outcomes are established.
Construction and New Builds: Danielle Hale, Realtor.com®’s Chief Economist, notes that builders are responding to supply constraints by increasing single-family and multifamily starts. This development could address the housing shortage but may not fully resolve the long-standing issue.

Market Behavior and Buyer Sentiment

September saw properties remaining on the market for an average of 28 days, compared to 26 days in August and 21 days in September 2023. First-time buyers accounted for 26% of sales, mirroring August’s all-time low and highlighting affordability challenges. All-cash sales represented 30% of transactions, indicating continued interest from investors and second-home buyers.

Conclusion

Despite the challenges, the U.S. housing market shows signs of resilience. As mortgage rates fluctuate and inventory increases, potential buyers might find more favorable opportunities in the coming months. While political uncertainty may play a role in market activity, the underlying demand remains strong. For buyers, sellers, and investors, staying informed and prepared is key to navigating this dynamic market.

Existing-Home Sales Fall 1% in September, a 14-Year Low