The home sales market registered a 10.9% drop in September, standing at an annual rate of 603,000 homes purchased compared to 677,000 in August of this same year. The comparison with September 2021 figures is even more frightening when 732,000 homes were sold, reflecting a 17.6% decline.
According to data released by the Census Bureau, the median sales price of new residences last month was $470,600.
MONTHLY NEW RESIDENTIAL SALES/ U.S. Census Bureau by Voz Media on Scribd
Overall home sales fell for the eighth consecutive month in September, according to data released last week by the National Association of Realtors (NAR) declining 1.5% from August to an annual rate of 4.71 million units, while year-over-year sales fell 23.8%.
NAR Chief Economist Lawrence Yun said in a statement following the release of the existing home sales data that, despite the slowdown, there is a difference between the current market dynamics and the 2008 housing crisis:
The current lack of supply underscores the stark contrast to the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.
Increase in interest rates
To address inflation, the Federal Reserve has made a series of increases in benchmark interest rates. This has led to a sharp increase in monthly mortgage payments, which has resulted in more buyers deciding not to purchase a home, thus generating a "cooling" in the real estate market.
Mortgage rates rose for the tenth consecutive week to 7.12% last Friday, reaching their highest level since 2001, according to data from the Mortgage Bankers Association. As a result, home prices experienced a historic slowdown in August, falling 2.6% amid aggressive Fed rate hikes that made paying a mortgage more expensive.
Compared to August of a year ago, home values are 13% higher. However, this steep drop in just 30 days suggests that prices will continue to fall. This hurts those who recently bought a home, according to the Case-Shiller index.
Further interest rate increases are expected after Labor Department data showed inflation hovering around 8%.
