According to the National Association of Realtors (NAR), existing-home sales declined in September. While all four major sales regions across the country saw year-over-year drops in sales, the outlook was brighter in the Northeast, where month-over-month sales increased.

Fewer Affordable Homes

The decline in home sales might be aggravated by low housing affordability. The 30-year fixed-rate mortgage averaged 7.5% in September, compared to under 7% a year earlier. According to Lawrence Yun, chief economist for NAR, “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”

Rising Home Prices and Persistently Low Inventory

Home affordability is further being hampered by climbing prices. Every sales region in the country recorded price increases in September, bringing the median existing-home price for all housing types to $394,300. This was an increase of 2.8% from a year ago, when the median sales price was $383,500. “For the third straight month, home prices are up from a year ago,” said Yun, “confirming the pressing need for more housing supply.” Total housing inventory, meanwhile, was up 2.7% month over month to 1.13 million units, an 8.1% decrease from September 2022. At the current sales pace, this would supply the housing market for 3.4 months, up from 3.3 months a month ago and 3.2 months a year ago.

Homes Still Selling Quickly

The average home was available for sale for 21 days in September, according to the REALTORS Confidence Index. This was up from 20 days in August and 19 days in September 2022. Of all the homes sold, 69% were available for under 30 days.

Fewer First-Time Buyers

First-time buyers might be feeling the pain of declining home affordability. This group was responsible for 27% of all purchases in September, down from 29% from both a month and a year earlier. According to the NAR “2022 Profile of Home Buyers and Sellers” from November 2022, the annual share of first-time buyers was 26%, the lowest on record.

All-Cash Sales at Record Highs

One group not impacted by higher mortgage rates are cash buyers. This group accounted for 29% of all September purchases, up from 27% a month ago and 22% a year ago. Individual investors and second-home buyers—two groups who often purchase with cash—were responsible for 18% of all home purchases, up from 16% in August and 15% from September 2022.

Regional Sales Breakdown

• Northeast: Existing-home sales annual rate of 500,000; an increase of 4.2% from August 2023 but a decrease of 16.7% from September 2022. The median sales price of $439,900 represented a 5.2% increase from September 2022.

• Midwest: Existing-home sales annual rate of 930,000; a decrease of 4.1% from August 2023 and 18.4% from September 2022. The median sales price of $293,300 represented a 4.7% increase from September 2022.

• South: Existing-home sales annual rate of 1.82 million; a decrease of 1.1% from August 2023 and 11.7% from September 2022. The median sales price of $360,500 represented a 3.1% increase from September 2022.

• West: Existing-home sales annual rate of 710,000; a decrease of 5.3% from August 2023 and 19.3% from September 2022. The median sales price of $606,100 represented a 1.8% increase from September 2022.