CHICAGO – Oct. 26, 2018 – A shift is occurring in many housing markets. As home prices continue to rise along with mortgage rates, more potential buyers are choosing to postpone a purchase – and more home sellers are now facing competition. In many locations, sellers should no longer expect the quick sale they've seen neighbors get in the past.
The number of For Sale signs is starting to increase across the country, and unsold inventory is at a 4.4-month supply at the current sales pace. Inventories were at 1.88 million in September, up slightly from 1.86 million a year ago, according to the National Association of Realtors®' (NAR) latest housing report.
"There is a clear shift in the market with another month of rising inventory on a year-over-year basis, though seasonal factors are leading to a third straight month of declining inventory," says Lawrence Yun, NAR's chief economist. "Homes will take a bit longer to sell compared to the super-heated fast pace that we saw earlier this year."
Existing-home sales declined in September, with all four major regions of the country seeing no gains in sales activity last month, according to NAR's report. Total existing home sales – completed transactions for single-family homes, townhomes, condos, and co-ops – dropped 3.4 percent in September compared to August and are now at a seasonally adjusted annual rate of 5.15 million. Sales are down 4.1 percent from a year ago.
"This is the lowest existing home sale level since November 2015," says Yun. "Decades-high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country."
The 30-year fixed-rate mortgage has jumped from an average of 3.99 percent in 2017 to an average of 4.63 percent in September.
"Rising interest rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory," Yun says.