Sales of new single-family homes rose in September, reaching a seasonally adjusted annual rate of 738,000. This represents a 4.1% increase from August’s revised figure of 709,000 and a 6.3% rise from the same month last year, according to new data from the U.S. Census Bureau and the Department of Housing and Urban Development released on Thursday. Despite this increase, the broader housing market remains on track for its weakest performance since 1995, according to the National Association of Realtors (NAR).
The median sales price for new homes in September was $426,300, with an average price of $501,000. New home inventory reached 470,000 units, equivalent to a 7.6-month supply at the current sales pace. However, sales of existing homes—the majority of the housing market—continue to face significant declines. NAR reported that existing-home sales in September fell 1% from August to a seasonally adjusted annual rate of 3.84 million, the lowest since October 2010. This figure also reflects a 3.5% decrease from September 2023.
Persistently high mortgage rates and tight inventory continue to limit affordability and suppress buyer activity. The Federal Reserve’s recent interest rate cut briefly reduced mortgage rates to 6.08% in September, but the decline was too late to significantly impact buying patterns. Since then, rates have climbed again, tracking with a 10-year Treasury yield that remains above 4%. NAR Chief Economist Lawrence Yun forecasts that 2024 home sales could match or fall below 2023 levels.
Meanwhile, the national median price for existing homes reached $404,500 in September, up 3% from last year and setting a record for the month. Homes took longer to sell, averaging 28 days on the market compared to 21 days a year earlier, as potential buyers faced uncertainties related to insurance costs and the upcoming 2024 elections.
A recent survey by Fannie Mae showed mixed expectations: while 42% of respondents anticipate lower mortgage rates within the next 12 months, 39% expect home prices to rise during the same period.
