Existing-home sales keep falling, while prices keep rising
The housing market in September 2023 continued to present challenges for homebuyers while favoring sellers, according to a report by the National Association of Realtors (NAR). Existing-home sales, referring to previously occupied properties, experienced a 2 percent decline from August, attributed to rising mortgage rates. This drop represents a significant 15.4 percent decrease from the previous year. Despite this, the nationwide median sale price settled at $394,300, showcasing a 2.8 percent year-over-year increase, albeit down from the all-time high of $407,100 in August.
Limited inventory and low affordability remain persistent issues, as emphasized by Lawrence Yun, NAR’s Chief Economist. In this blog post, we’ll delve into the key takeaways and insights from the September 2023 housing market report.
Sales Performance:
The existing-home sales statistic encompasses completed sales of non-new-construction properties, including single-family houses, condos, townhouses, and co-ops. In September 2023, the national sales pace dropped to 3.96 million homes, marking a decline from both the previous month and year.
Regional Disparities:
Regionally, the Northeast experienced a 4.2 percent increase in September sales compared to August, though it still reflects a 16.7 percent drop from September 2022. Meanwhile, the Midwest saw a 4.1 percent decline month-over-month and an 18.4 percent decrease year-over-year. In the South, sales dropped 1.1 percent from the previous month and 11.7 percent from the prior year. The West recorded the most significant declines, with a 5.3 percent drop month-over-month and a 19.3 percent decrease year-over-year.
Days on Market:
Properties spent an average of 21 days on the market in September, one day longer than in August and two days longer than in September 2022. Notably, over two-thirds (69 percent) of existing U.S. homes sold in September were on the market for less than a month.
Price Trends:
The nationwide median sale price for existing homes in September stood at $394,300, reflecting a 2.8 percent increase from the same period in 2022. This marks the third consecutive month of year-over-year price increases. The West maintained the highest median price at $606,100, while the Northeast’s median rose 5.2 percent to $439,900. The South and Midwest reported median prices of $360,500 (up 3.1 percent) and $293,300 (up 4.7 percent) respectively.
Impact of Housing Shortage:
The Northeast witnessed the most significant price gain due to higher demand coupled with a 20 percent reduction in inventory. Total housing inventory across the nation reached 1.13 million units by the end of September, a modest increase from August but an 8.1 percent drop from the previous year. This level of supply represents only a 3.4-month supply, falling short of the five to six months needed for a balanced market.
Conclusion:
The September 2023 housing market report underscores the ongoing challenges facing homebuyers, with limited inventory and affordability concerns prevailing. Rising mortgage rates have contributed to a decline in existing-home sales, emphasizing the need for a boost in housing supply. The regional disparities in sales performance and price trends reflect the complex dynamics at play in the market. As we move forward, the direction of mortgage rates and broader economic health will play crucial roles in shaping the housing market’s trajectory.