US Home Sales Reach 7-Month High, Affordability Still a Challenge

U.S. home sales experienced a notable increase in September, reaching a seven-month high. This rise highlights the growing interest in the housing market, despite ongoing challenges with affordability. The latest data from the National Association of Realtors (NAR) reveals key insights into the current state of home sales.

Home Sales Data

• Existing home sales rose by 1.5% in September.
• The seasonally adjusted annual rate of sales reached 4.06 million units.
• This figure marks the highest level since February.
• Home resales saw a year-over-year increase of 4.1%.

Regional Performance

Sales trends varied across regions. The Northeast, South, and West reported increases, while the Midwest experienced a decline. The surge in sales, particularly at the higher end of the market, reflects economic disparities among buyers.

Affordability Challenges

Despite the rise in sales, affordability remains a significant challenge for many. Economic uncertainties and a stagnant labor market contribute to this issue. As mortgage rates hit one-year lows, many potential buyers still struggle, particularly those in lower and middle-income brackets.

Price Trends and Inventory

• The median price of existing homes rose by 2.1% to $415,200.
• Inventory levels showed a 14% increase, totaling 1.550 million units, though still below pre-pandemic figures.
• Properties stayed on the market for an average of 33 days, compared to 28 days last year.

High-End Market Performance

The luxury market showed particularly strong growth. Sales of homes priced over $1 million jumped by 20.2%. Homes priced between $750,000 and $1 million increased by 14.4%. Conversely, sales for homes in the $100,000 to $250,000 range saw only a 6% rise.

Outlook on Home Sales

Economists predict home sales may stabilize through late 2023 and early 2024. Further improvements are expected as mortgage rates decline and economic conditions improve. The NAR anticipates a gradual recovery in the housing market as these factors align.

First-Time Buyers and All-Cash Sales

• First-time buyers made up 30% of home sales, up from 26% last year.
• Economists estimate that a 40% share of first-time buyers is needed for a robust market.
• All-cash transactions accounted for 30% of sales, maintaining the same level as the previous year.

This recent data reflects the complex dynamics of the U.S. housing market, balancing between burgeoning demand and the pressing challenges of affordability. As conditions evolve, potential buyers and sellers alike will be closely monitoring these trends.