Existing home sales fell 3.4% in September causing home sales to tumble more than 4% from a year ago this time, according to the National Association of Realtors.
Sales are now clocking in at a seasonally adjusted rate of 5.1 million, down from 5.37 million in September of 2017.
“This is the lowest existing home sales level since November 2015,” said Lawrence Yun, chief economist at NAR. “A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur under-performing sales activity across the country.”
Interest rates are on the rise. Mortgage interest rates averaged 4.85% on a 30-year fixed-rate mortgage for the week ending October 18, according to Freddie Mac. The 15-year adjustable rate mortgage averaged 4.26% while the 5-year ARM averaged 4.1%. Last year, this time, mortgage rates were under 4%.
“While the housing market has clearly softened in reaction to the rise in mortgage rates, the economy and consumer sentiment remain very robust and that will sustain purchase demand, particularly in affordable markets and neighborhoods,” says Freddie Mac in a written statement.
Pending home sales are down and prices are moderating. The median existing home price rose 4.2% to $258,100 from September 2017. While that’s the 79th consecutive year-over-year increase, the experts say the pace of such growth is losing steam. Freddie Mac says for the year, “we anticipate that home prices will increase 5.5% with the growth rate moderating to 4.5% in 2019.”
Inventory remains low with 4.4 month supply of inventory at the current sales pace, according to NAR. Properties typically sold in 32 days in September, up slightly from 29 days in August. “Home will take a bit longer to sell compared to the super-heated fast pace seen earlier this year,” said Yun.
“Rising interest rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory,” said Yun.
First time homebuyers accounted for 32% of September sales, up from 29% a year ago.