Existing home sales declined to their lowest level since November 2015, according to the September National Association of Realtors existing home sales report.
Existing home sales dropped to 5.15 million in September, a 3.4 percent drop from August and a 4.1 percent drop from September 2017’s 5.37 million. One of the main reasons cited for the decline is rising interest rates. According to Freddie Mac, the average commitment rate for a 30-year fixed rate mortgage is up to 4.63 percent. NAR notes that the average for all of 2017 was 3.99 percent.
“This is the lowest existing home sales level since November 2015,” Lawrence Yun, NAR chief economist, said. “A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. Affordable home listings remain low, continuing to spur underperforming sales activity across the country.”
Rising home prices are also adding to the decline in sales as the median existing home price was up 4.2 percent from last year to $258,100. This is also the 79th straight month of year-over-year increases.
“Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range,” said NAR President Elizabeth Mendenhall. “Entry-level homes remain highly sought after, as prospective buyers are advised to contact a Realtor as early in the buying process as possible in order to ensure buyers can act fast on listings that catch their eye.”
Inventory decreased from 1.91 million in August to 1.88 million existing homes for sale in September. However, this is up from 1.86 million homes available last year. Unsold inventory is up to a 4.4-months supply at the current sales pace. Additionally, the sale of homes is slowing down for the fall with properties staying on the market for 32 days on average.
“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,” said Yun. “Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year.”