Existing-home sales dropped 3.4 percent to a seasonally adjusted 5.15 million units in September, according to the National Association of Realtors’s monthly existing-home sales report, released Friday. The decline marks the sixth-consecutive month of flat or falling sales and the slowest sales pace since November 2015.
Total inventory decreased 1.91 million in August to 1.88 million in September, a modest year-over-year improvement from the 1.86 million units available in 2017.
Meanwhile, unsold inventory is currently at a 4.4-month supply while homes stayed on the market for 32 days in September. Forty-seven percent of homes sold in September were on the market for less than a month, according to the existing-home sales report.
“While inventory continues to show modest year-over-year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” said Lawrence Yun, chief economist at NAR, in a statement. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory – especially moderately priced, entry-level homes – would propel sales.”
Following five months of declines, expectations arose that home sales would remain flat, as they had in August. But it’s clear that the current market is not conducive to home buying — along with the monthly drop, home sales also fell 1.5 percent year-over-year.
This is, in part, caused by low inventory and rapidly increasing home prices — the median existing-home price is now $258,100, up 4.2 percent from September 2017. This month, there was a total of 1.88 million homes on the market, up f1.1 percent from a year ago.
Regionally, the south shouldered the biggest drop in existing-home sales at 5.4 percent, followed by the Northwest at 2.9 percent and the Midwest at 1.5 percent.
While grim, slumping existing-home sales could also signal a reversal of the housing market because fewer people buy homes, more listings can become available and ultimately drive up sales down the road, said senior Realtor.com economist Joseph Kirchner.
“While it’s not yet a buyer’s market in most areas of the country, these changing conditions mean that sellers may need to be mindful of their competition, as buyers have been for years,” said Joseph Kirchner, senior economist at Realtor.com, in a statement.