Existing-home sales sink to lowest level since 2010

Sales of previously owned U.S. homes fell in September to the lowest level since 2010 as affordability worsened even further.

Contract closings decreased 2% from a month earlier to a 3.96 million annualized pace, National Association of Realtors data showed Thursday. The median estimate in a Bloomberg survey of economists called for a reading of 3.89 million.

Sales were down nearly 19% from a year earlier on an unadjusted basis.

The resale market remains historically depressed under the weight of decades-high mortgage rates. Not only are prospective buyers discouraged, but homeowners who previously locked in lower mortgage rates have no incentive to move, putting pressure on inventories and therefore prices.

"As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales," said Lawrence Yun, NAR's chief economist. "The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains."

The median selling price rose 2.8% from a year earlier to $394,300, the highest September reading on record. NAR's measure of housing affordability fell in August to the lowest level in data back to 1989, according to a separate report.

Yun said about a quarter of homes were sold above list price last month, indicating many properties — especially starter homes — are still receiving multiple offers. And for frustrated buyers who have lost out in bidding wars, they're increasingly removing contingencies like inspections and appraisals to get their offer approved, he said.

Lean Inventory

The number of homes for sale ticked up to 1.13 million, but was still the lowest for any September in data back to 1999. At the current sales pace, it would take 3.4 months to sell all the properties on the market, up slightly from the prior month. Realtors see anything below five months of supply as indicative of a tight market.

The NAR's report showed 69% of homes sold were on the market for less than a month. Properties remained on the market for 21 days on average in September, a slight increase from the prior month.

Existing-home sales account for the majority of U.S. housing and are calculated when a contract closes. Data on new-home sales, which make up the remainder and are based on contract signings, are due next week.