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Home sales, mortgage rates overview:
- Who: The sale of previously owned homes dropped 1.5% from August to September amid rising mortgage rates and lighter inventory.
- Why: Higher mortgage rates cause the price of existing homes to increase and stay on the market for longer.
- Where: The data reflects home sales and mortgage rates nationwide.
The sale of existing homes has slowed to a point not seen since September 2012 — outside of a brief time near the beginning of the COVID-19 pandemic — according to the National Association of Retailers.
Previously owned home sales dropped 1.5% from August to September to end at a seasonally adjusted annual rate of 4.71 million units, according to the National Association of Retailers monthly survey, CNBC reports.
The decline in sales marked the eighth straight month for previously owned homes, while sales in total reportedly decreased 23.8% year-over-year.
Significantly higher mortgage rates could be to blame for the decrease in sales for previously owned homes, according to CNBC, which reports that the average rate for a 30-year fixed home loan rose to more than 7% after beginning the year near 3%.
The higher mortgage rates make the market for existing home sales less affordable and slow down sales, while, at the same time, the inventory for previously owned homes declines, CNBC reports.
Decreased supply of existing homes increases purchase cost
The amount of existing homes for sale in September was reportedly 1.25 million — representing only a 3.2-month supply and down 0.8% year-over-year.
Less supply of previously owned homes has made them more expensive with the median price of an existing home rising 8.4% year-over-year for a total of $384,800, the 127th straight month an annual increase has occurred, CNBC reports.
Prices are cooling down; however, with September marking the third consecutive month that the average price for existing homes declined, which is reportedly in line with what is normal for the time of the year.
Existing homes were also listed for sale an average of three days longer in September than in August, in addition to a year-over-year increase of two days more, CNBC reports.
In related news, the average mortgage interest rate increased to more than 6% for the first time since 2008 last month, according to data released by the Mortgage Bankers Association.
Have you recently purchased or sold an existing home? Let us know in the comments!
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