U.S. Home Sales See Boost in September

In September, the sales of previously owned homes in the U.S. picked up speed, likely spurred by lower mortgage rates and an increase in available properties, which, you know, tends to encourage buyers to jump in.

According to the National Association of Realtors, existing home sales climbed by 1.5% from August, reaching a seasonally adjusted annual rate of 4.06 million units. This marks the quickest sales pace we’ve seen since February.

Interestingly, this is also a 4.1% increase compared to September of last year.

However, the sales figures fell just short of the anticipated 4.07 million units predicted by economists, based on insights from FactSet.

In terms of pricing, the national median sales price for September was $415,200, which is up 2.1% from the same month last year. This continues a streak of annual home price increases now reaching 27 consecutive months. It’s important to note that this median price represents the highest for September since records began in 1999.

The U.S. housing market has been pretty sluggish since 2022, especially following the rise in mortgage rates from previous historic lows. Last year saw a downturn in sales of previously owned homes, hitting levels we haven’t seen in about three decades.

Moving on, mortgage rates had actually started to decrease around July, which coincided with the Federal Reserve’s decision last month to cut its key interest rate for the first time in a year. This decision was largely influenced by mounting concerns over the U.S. job market.

Homes sold last month probably closed earlier—around July and August—when the average interest rates on a 30-year mortgage floated between 6.75% and 6.56%, as reported by Freddie Mac. Since then, we’ve seen a further drop, with rates dipping to about 6.27% last week.

While lower rates are improving purchasing power, the overall high prices remain a barrier for many Americans trying to afford homes. Over the past six years, the median sales price has surged by 53%, even before the pandemic sparked additional demand.

For those who can still afford it, buyers are now benefiting from a larger selection of properties, which, I suppose, balances out the supply and demand situation a bit more effectively.

The National Association of Realtors noted that there were 1.55 million unsold homes at the end of last month—up 1.3% from last August and 14% from September itself. But even with this increase, we’re still well below the typical pre-pandemic sales rate, which hovered around 2 million units.

There’s a persistent shortage of homes on the market, particularly those priced affordably. This situation especially impacts first-time homebuyers who lack the equity to help with their new purchases. In fact, first-time buyers made up only 30% of home sales last month, whereas historically, they used to account for about 40%.