Sales of previously owned homes in the U.S. rose modestly last month as lower mortgage rates and weaker price increases sparked some activity in the country’s long-stagnant housing market.
The number of contracts rose 1.5% in September to 4.06 million on an annual basis, the highest in seven months, according to figures from the National Association of Realtors released Thursday. That matched the average estimate of economists surveyed by Bloomberg.
The average sales price rose 2.1% from a year ago to $415,200, continuing a streak of annual price increases dating back to mid-2023. Year-over-year price growth averaged more than 4% in 2024.
READ MORE:
“As expected, falling mortgage rates are driving an increase in home sales,” NAR chief economist Lawrence Yun said in a statement. “Housing prices continue to rise in most parts of the country, further contributing to overall household prosperity.”
Last month’s improved sales built on the momentum building in both countries
“Demand is starting to move” as homes become slightly more affordable and buyers and sellers with a margin return to the market, according to a
However, any recovery is expected to be slow. Despite their recent dip, interest rates are almost double what they were at the end of 2021, and the Mortgage Bankers Association expects them to remain at 6.4% through the end of next year. And despite the progress, sales have hovered around 4 million for most of the past three years, hitting some of the weakest levels since the Great Recession.
A positive sign, especially for buyers, is the increase in the number of homes on the market. Last month, the supply of homes for sale rose 14% from a year ago to 1.55 million, one of the highest levels since before the pandemic.
Existing home sales rose in three of the four regions, with closings in the South and West rising the fastest since earlier this year. First-time homebuyers accounted for 30% of home sales, up from 28% the previous month. This is a modal window.
Last month, individual investors or second home buyers purchased 15% of homes, compared to 21% a month earlier. That “volatility” could come as investors anticipate a downward shift in rental prices in the future, Yun said on a call with reporters.
NAR will take another look at its previously owned September home market on Wednesday with the release of its current sales report, which is often seen as a leading indicator of actual sales because it reflects contract signings. Friday’s scheduled report on September new home sales from the Census Bureau will likely be postponed due to the government shutdown.
Given the lack of federal data, Yun said NAR staff searched sales databases to find the new home rate, which he said was up 11.2% last month from a year ago.