The latest report from the National Association of Realtors® (NAR) on existing-home sales today revealed a 1.5% month-over-month increase in September, and a 4.1% year-over-year increase in sales–key factors that could signal growing buyer confidence and demand as mortgage rates ease.
“As anticipated, falling mortgage rates are lifting home sales,” said NAR Chief Economist Lawrence Yun. “Improving housing affordability is also contributing to the increase in sales.”
While September marked the strongest showing in six months, Yun added, “I would not characterize it as a breakout. It does show that consumers respond to lower mortgage rates, as always happens.”
Housing inventory reached 1.55 million units in September, up 1.3% since August and 14% from the previous year, an encouraging sign that supply is slowly recovering. However, Yun noted that another 300,000 homes would need to come onto the market to bounce back to pre-COVID numbers.
“Inventory is matching a five-year high, though it remains below pre-COVID levels,” Yun added. “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth.”
The median existing-home price stands at $415,200, up 2.1% from a year ago and marking the 27th consecutive month of increases. According to Yun, prices have risen 53% over the past six years, while wages are up only 30% since pre-COVID levels, reflecting a widening gap between income growth and housing costs.
Yun noted that it may appear that prices declined from June’s $430,000 peak to September’s $415,000, but that’s a normal seasonal pattern as smaller homes typically sell in the autumn and winter months.
Regionally, sales rose in the Northeast, South and West while dipping in the Midwest. The West led month-over-month gains with a 5.5% increase, followed by the Northeast and South, both up just over 2%. Year-over-year, the South saw the strongest growth at 6.9%, followed by the Northeast and Midwest, while the West held steady. Median home prices were up this September across all regions, with the Midwest posting the largest annual gain at 4.7%
According to NAR’s REALTORS® Confidence Index, homes spent longer on the market in September, at 33 days, up from 31 days in August and 28 last year. First-time buyers accounted for 30% of sales, up from 28% in July, reflecting renewed activity among entry-level purchasers. Additionally, 30% of transactions were cash sales, 15% of transactions were individual investors or second-time buyers and 2% of sales were distressed sales.
The average 30-year fixed mortgage rate fell this September to 6.35% from 6.59% in August, helping to improve affordability. Realtor.com® Chief Economist Danielle Hale noted that this momentum could continue in the next few months.
“Looking ahead, home sales in October and November will reflect purchases that began during what’s typically the best time to buy a home based on typical seasonal patterns, when buyers can count on an edge from limited competition and relatively abundant inventory that usually results in lower home prices,” Hale said.
“This is in addition to the benefits of mortgage rates that have fallen to the lowest level in nearly a year and market momentum shifts that have resulted in more widespread price cuts, particularly for homes in lower price tiers. Taken together, these could help sustain a modest pickup in transaction activity.”
For the full report, click here.
