Home sales dropped to their lowest rate in 13 years in September as buyers continued to practice patience amid soaring interest rates. Paradoxically, these high rates are also constraining housing inventory because homeowners with favorable interest rates are reluctant to sell and relocate, leading to a shortage of available homes. That resulting scarcity is pushing home prices upward, further exacerbating affordability issues.
In September, existing home sales decreased by 2% to a seasonally adjusted annual rate of 3.96 million, the lowest since October 2010, according to the National Association of Realtors. Additionally, prices surged, with the national median existing-home price rising by 2.8% year over year to $394,300, a historic high for September.
That was the highest price for any September in data going back to 1999, said Lawrence Yun, NAR’s chief economist. Prices aren’t adjusted for inflation. "People are priced out," Yun said. "The story of limited inventory and rising, and rising, [and] rising mortgage rates continue to hinder the home sales market."