September home sales fell to their lowest level since 2010

Sales of previously owned homes fell 1% in September from August, a seasonally adjusted, annual rate of 3.84 million units, the slowest pace since October 2010, according to the National Association of Realtors.

Sales were down 3.5% from September 2023. Sales fell in three of the four US regions, with only the Western region showing gains.

This calculation is based on closings, which represent contracts signed in July and August. Mortgage rates started July near 7% on 30-year fixed and then gradually fell below 6.5% by August. Rates are now a full percentage point lower than a year ago.

“Home sales have largely stuck to a roughly four-million-unit pace over the past 12 months, but factors typically associated with higher home sales are developing,” said Lawrence Yun, chief economist at the National Association of Realtors.

Inventory rose 1.5% month over month to reach 1.39 million homes for sale at the end of September. This represents a 4.3-month supply at current sales pace. Inventories were up 23% from September 2023.

“More inventory is definitely good news for home buyers because it gives consumers more properties to look at before making a decision,” Yun said. “However, distressed property inventories are minimal as mortgage delinquency rates remain very low. Distressed property sales accounted for all transactions in September.”

Still low inventory pressure continues to push prices higher. The median price of an existing home sold in September was $404,500, a 3% year-over-year increase and the 15th consecutive month of annual price gains.

Cash continues to be king in this market, making up 30% of September sales. Pre-Covid, cash buyers made up about 20% of sales. Yun noted that it's not just investors using cash, as investors actually fell back slightly in September to just 16% of sales, down from 19% in August.

Houses are sitting longer, an average of 28 days compared to just 21 days a year ago. First-time buyers are back, accounting for just 26% of September sales. That matches the all-time low since August.