Increase in properties can't stop sluggish US home sales in September

LOS ANGELES, California: U.S. home sales in September slowed to the weakest pace seen in almost 14 years, despite a slight easing of mortgage rates and an increase in available properties.

The National Association of Realtors (NAR) reported that existing home sales fell by 1 percent compared to August, reaching an annual rate of 3.84 million. This marks the second consecutive monthly decline and is the slowest pace since October 2010, when the market was still struggling after the late-2000s housing crash.

Sales were down 3.5 percent compared to the same month last year. Regionally, home sales dropped in the Northeast, South, and Midwest, while the West saw a slight increase.

"The factors that typically drive higher home sales, such as lower mortgage rates compared to a year ago, increasing inventory, and ongoing job growth, are present. Yet, sales remain at low levels," said Lawrence Yun, NAR's chief economist.

Despite the sluggish sales, home prices continued to rise, marking the 15th consecutive month of annual growth. The national median sales price increased by three percent year-over-year, reaching US$404,500. Though price growth has slowed, the median price is still 49 percent higher than it was five years ago.

The U.S. housing market has been in a downturn since 2022, coinciding with the rise in mortgage rates. Last year, home sales sank to a nearly 30-year low as mortgage rates surged to their highest level in 23 years, reaching almost eight percent.

Mortgage rates have since eased slightly, with the average rate on a 30-year mortgage dropping to 6.44 percent last week, down from the peak. However, potential buyers may be waiting for rates to decrease further, especially with the upcoming presidential election.

"Falling mortgage rates in July and August were expected to bring more buyers into the market, but some home shoppers may be holding out for rates to fall further," said Lisa Sturtevant, chief economist at Bright MLS. "Others may be taking a wait-and-see approach in the lead-up to the presidential election."

Inventory levels continued to climb, with 1.39 million unsold homes by the end of September, representing a 4.3-month supply at the current sales pace. Homes are also staying on the market longer, averaging 28 days in September compared to 21 days a year ago.

A positive sign for buyers is that fewer homes are attracting multiple offers. About 20 percent of homes sold last month were bought for more than their original list price, down from 26 percent a year earlier. However, first-time buyers continue to struggle, accounting for just 26 percent of sales, matching an all-time low.