Existing-Home Sales Rise Unexpectedly in September

Existing home sales in the U.S. rose unexpectedly in September as inventory increased, giving buyers more choices, the National Association of Realtors reported.

However, Reuters said the trend remained subdued against the backdrop of higher mortgage rates.

NAR said Tuesday that home sales rose 1.5% last ​month to a seasonally adjusted annual rate of 3.99 million units. Reuters reported that economists it polled had forecast home resales would decline to a rate of 3.95 million units.

Sales dropped 2.2% on a year-over-year basis in September, NAR reported.

“Despite the small monthly gain on a seasonally adjusted basis, August and September marked the two slowest months ‌for ​home sales this year,” said Lawrence Yun, NAR’s Chief Economist. “Further increases in mortgage rates in recent weeks mean fewer buyers can qualify to purchase a home.”

Yun added: “Higher inventory and lengthening days on market give buyers improved negotiating power. Home sellers need to be realistic about local market conditions, which could require price discounts and other incentives to attract buyers.”

Upward Trend

Reuters said that mortgage rates have been on an upward trend since the U.S.-Israeli war with Iran started at the end of February. The war is fueling inflation and boosting ​U.S. Treasury yields, which mortgage rates track.

The 30-year fixed mortgage rate averaged 7.40% last week, the highest level since November 2023, compared with 7.28% in the prior week, data from mortgage finance agency Freddie Mac showed.

The rate has risen by 142 basis points ​since the end of February.

NAR reported that sales rose in the South and West regions, but fell in ​the Northeast and were unchanged in the Midwest.

Existing housing inventory increased ‌1.9% to 1.6 million units, the highest level since November 2019. Supply was 4.6% higher than a year ago. At September’s sales pace, NAR said it would take 4.8 months to exhaust the current inventory of existing homes, unchanged from August but up from 4.5 months a year ago.

According to the NAR report, the median existing home price last month rose 1.3% from a year ago to $417,500, the highest for any September. First-time buyers accounted for 31% of sales, up from 30% ‌in August and a year ago. Reuters reported that a 40% share in this category is needed for a robust housing market.

Distressed Sales Unchanged

NAR noted that the median ​number ‌of days on the market for listed properties climbed to ​33 from 31 in August, but was unchanged from a year ago. Distressed sales, including foreclosures, were unchanged at 2%, NAR said. The share of cash transactions was unchanged from August at 27%, but declined from 30% a year ago.

NAR reported that individual investors or second-home buyers accounted for 20% of transactions, up from 15% in August and a year ago.