One of the key indicators of US home prices fell for the third straight month in September.
The National Association of Realtors said Thursday that its average selling price for an existing home in the United States was $ 352,800 last month – the third straight fall from a June peak of $ 362,800, or 2.8%. However, the cooling fueled by the once-hot housing market left a median of 13.3% compared to September 2020 – the smallest year-on-year gain this year.
Sales of previously inhabited US homes in September returned to their highest pace since January, with sales up 7% from August to 6.29 million units per year on a seasonally adjusted basis.
But rising prices have reduced the number of home hunters who can afford to buy. Sales were down 2.3% from September 2020. The share of new buyers dropped to 28% last month. And, looking into the future, the affordability of housing is unlikely to increase.
“The slight improvement in supply in the previous months helped push sales in September,” NAR chief economist Lawrence Yoon said in a statement.
Last month, 1.27 million homes were listed for sale, down 13% from a year ago. At the current pace, it will take 2.4 months for all homes on the market to sell, up from an average of about 4 months before the pandemic.
Homes that are in stock remained on the market for an average of 17 days last month, up from 21 days last year, and 86% of homes sold in September were on the market for less than a month.
“The days when stocks fell 20% or 25% are over,” Yun said. “The recession is narrowing and soon in 2022 we will see stocks rise from last year.”
Yoon noted that the fall in mortgage rates in August forced buyers to urgently close deals on their homes, which led to the September increase in the number of completed deals.
While the average 30-year mortgage rate remains close to historic lows, it has been steadily rising since August, when mortgage buyer Freddie Mac said the weekly rate averaged 2.77%. The average rate rose to 3.09% this week, the highest level since April, when it peaked at 3.18%. A year ago, the average rate was 2.8%. This increase reduced the purchasing power of potential homeowners by 3.7%.
Economists expect mortgage rates to rise to 4% next year as the Federal Reserve takes action to curb inflation. The central bank is expected to announce a timetable for cutting monthly bond purchases at next month’s policy meeting. These bond purchases have helped keep mortgage rates ultra-low for much of the past 18 months.
Homes purchased with cash were up 23% in September from the previous month. Individual investors, who account for a lot of cash sales, accounted for 13% of all home sales last month.
Despite the rise in sales last month, there are signs that the housing frenzy, which has driven the average home price up 20-25% annually, is waning. There are fewer offers on the real estate market, Yoon said, and buyers are increasingly refusing to give up their right to inspect or evaluate a home.
Bloomberg News, Associated Press and Jonathan Lansner of Southern California News Group contributed to this report.