Home Sales in US Slow to 2012 Pace

Sales of previously occupied US homes fell in September for the eighth month in a row, matching the pre-pandemic sales pace from 10 years ago, as house hunters grappled with sharply higher mortgage rates, rising home prices, and a still tight supply of properties on the market. The National Association of Realtors said Thursday that existing home sales fell 1.5% last month from August to a seasonally adjusted annual rate of 4.71 million, the AP reports. That's slightly higher than economists were expecting, according to FactSet.

Sales fell 23.8% from September last year, and are now at the slowest annual pace since September 2012, excluding the steep slowdown in sales that occurred in May 2020 near the start of the pandemic. The national median home price rose 8.4% in September from a year earlier to $384,800. The housing market has been slowing this year because of rising mortgage rates. The average rate on a 30-year home loan rose to 6.94% this week, the highest rate since April 2002, according to mortgage buyer Freddie Mac. A year earlier, the rate averaged 3.09%. Higher mortgage rates reduce homebuyers' purchasing power, resulting in fewer people being able to afford to buy a home.

For instance, a buyer who got a 3% rate on a 30-year mortgage to buy a $300,000 home last year would only be able to borrow $190,000 today for the same monthly payment. "This is why the buyers have essentially been pushed out of the market," said Lawrence Yun, NAR’s chief economist. Mortgage rates have risen sharply along with the 10-year Treasury yield, which has been climbing amid expectations that the Federal Reserve will keep hiking interest rates in its bid to bring down inflation. The 10-year yield reached its highest level since June 2008 this week. Because a lag of a month or two usually exists between a signed home purchase contract and a completed sale, the impact from the latest increase in mortgage rates won’t show up in sales for several weeks. That likely means further home sales declines ahead, Yun said.

(More existing home sales stories.)