As the U.S. housing recession worsens, existing home sales have fallen to their slowest pace in 10 years, according to reports.
With the exception of the first few months of the pandemic, home sales have now slowed to levels not seen since September 2012.
Sales of homes are 23.8 percent lower than at the same time last year.
Sales of previously owned homes in September dropped for the eighth consecutive month, by 1.5 percent from August, to a seasonally adjusted annual rate of 4.71 million units, according to a report by the National Association of Realtors (NAR).
“The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6 percent for 30-year fixed mortgages in September and are now approaching 7 percent,” said NAR Chief Economist Lawrence Yun.
The Federal Reserve’s plan to boost interest rates to fight inflation has led mortgage rates to skyrocket and the housing market to weaken and slow down.
Such high rates are making already expensive homes even less affordable.
The average rate on a 30-year fixed home loan is now at 7.125 percent, after beginning the year at around 3 percent.
“Homeowners love their 3 percent mortgage rate, and they don’t want to give that up,” Yun noted.
The high mortgage rates are also keeping sellers on the sidelines as well, adding to the lack of housing stock.
Meanwhile, housing inventory has continued to drop, despite a slowdown in sales.
Available homes have dropped to 1.25 million units at the end of September, a year-over-year drop of 0.8 percent.
There is currently a 3.2-month supply of homes at the current sales pace, which is far below the six months required to have a balanced supply.
“The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today,” Yun noted.
“Despite weaker sales, multiple offers are still occurring, with more than a quarter of homes selling above list price due to limited inventory.”
The declining supply of homes is putting extreme pressure on the market, with prices rising across the board for 127 consecutive months of annual increases.
The median price of an existing home in September rose to $384,800, a year-over-year increase of 8.4 percent.
Home prices for September have declined for the third straight month, particularly at the low end of the market, where inventory is tighter.
Units ranging between $100,000 and $250,000 fell 28.4 percent from 2021, while homes priced between $750,000 and $1 million declined 9.5 percent.
Unsold homes have been on the market longer in September, for an average of 19 days, up from 16 days in August, with a year-over-year increase of two days.