ECONOMY
US Sales Of Existing Homes Drop To 13-Year Low In September Amid Rising Prices And Mortgage Rates
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U.S. sales of existing homes fell in September to the lowest level in 13 years, since the foreclosure crisis, as interest rates surge, home prices skyrocket, and inventory remains low.
U.S. sales of previously occupied homes including single-family homes, townhomes, condominiums and co-ops in September fell 2% from the month before, and 15.4% from last year, according to data released Thursday by the National Association of Realtors.
Total housing inventory at the end of September was 1.13 million units, up 2.7% from August but down 8.1% from one year ago. The median price for existing housing of all types in September was $394,300, an increase of 2.8% from September 2022.
As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales. The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains, NAR Chief Economist Lawrence Yun said in a statement.
For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply, Yun said.
Speaking at the Economic Club of New York on Thursday, Federal Reserve Chairman Jerome Powell said inflation is still too high, indicating another rate hike could be coming after the Federal Open Market Committee meeting this month.
“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” he said.
This is like a rush hour traffic jam, said expert Ted Jenkin, who is the co-founder of Left Exit Stage Advisors. Homeowners are currently stuck. Their current mortgage rates are too good to walk away from and it just doesn’t make sense to upgrade the value of their home to walk into a 7.5% 30 year mortgage. We may see this trend for an extended period of time.
According to the Federal Home Loan Mortgage Corporation, or Freddie Mac, the 30-year fixed-rate mortgage averaged 7.57% as of Oct. 12, up from 7.49% the previous week and 6.92% one year ago.
According to a report released earlier this month by the Consumer Financial Protection Bureau, the number of mortgage applications rejected due to insufficient income shot up in 2022, thanks to high home prices and rising interest rates.
In 2022, lenders denied loan applications due to insufficient income, as calculated by debt-to-income (DTI) ratios, more often than during any year since records began in 2018, the agency said. High prices and interest rates didn’t just fuel denials, they also slowed applications in general. The total number of mortgage applications in 2022 dropped by about 9 million, or 38.6% from 2021.
TMX contributed to this article.
