Despite Federal Reserve efforts to cool demand, home sales in the US continue to drop. The National Association of Realtors reported home sales declined by 1.5% in September. The slowdown could lead to homes being sold for less and prices falling.
The Federal Reserve raised its short-term benchmark funds rate three quarters of a point in September. This increase has boosted mortgage rates to record highs. These rates are causing prospective buyers to stay away from once-hot housing markets. They are also keeping homesellers on the sidelines.
Sales fell in nine of the top 10 housing markets. However, New York was the only exception. The declines ranged from 10% in Phoenix to over 20% in Houston.
Sales of new single-family homes fell 17.6% in September. Fannie Mae has revised down its estimate for the year’s total home sales to 5.71 million units. The housing finance agency had previously predicted 5.78 million units.
The median price of an existing home sold rose 8.4% in September. However, prices declined faster at the bottom end of the market. The median price of a home between $750,000 and $1 million fell 9.5%.
The number of distressed sales, including short sales, increased from 1% in August to 2% in September. First-time buyers accounted for 29% of all purchases. Individual investors accounted for 15% of all cash sales.
The Fed’s effort to fight rampant inflation has led to higher mortgage rates. The average 30-year fixed rate mortgage rose to 6.94% this week. However, mortgage affordability continues to decline because home prices remain stubbornly high. The rise in mortgage rates is causing prospective buyers to stay away from homes and renters to delay buying.