As Halloween approaches, the insanely unhealthy housing market continues to boom. Sales continue to decline, home prices continue to rise, and inventory remains negative year over year. The basic problem? Too many people are chasing too little and days on market are still under 30 days. Moreover, mortgage interest rates are currently 8%. It’s like inviting Freddy Krueger, Jason and Michael Meyers to a party in a haunted housing market.
Let’s take a look at what the existing home sales market has told us in 2023 as mortgage rates rise.
WITH NAR: : Total existing home sales completed, which includes single-family homes, townhomes, condominiums and cooperatives, declined 2.0% from August to a seasonally adjusted annual rate of 3.96 million in September. Year-on-year, sales decreased by 15.4% (down from 4.68 million in September 2022).
Here is a breakdown of key charts on key data lines based on NAR information.
FROM NARA: : According to the Realtor Confidence Index, properties typically stayed on the market for 21 days in September, compared to 20 days in August and 19 days in September 2022. Sixty-nine percent of homes sold in September were on the market for less than a month.
Days on market increased year over year from 19 to 21 days in September. The days on market rate is very seasonal and we will now see the typical seasonal increase. However, in a regular market, this number would exceed 30 days. So, even though we are no longer teenagers, I still prefer days on market to be longer than 30 days.
Moreover, the percentage of people buying for cash increased year-on-year from 22% to 29%. As fewer people finance their homes, the percentage of cash buyers is rising, especially as the sales landscape deteriorates. We can see the second result as the number of first-time homebuyers dropped year over year from 29% to 27%.
FROM NARA: The total housing stock registered at the end of September was 1.13 million units, an increase of 2.7% compared to August, but 8.1% lower than a year ago (1.23 million). The supply of unsold inventory is 3.4 months at current sales rates, compared to 3.3 months in August and 3.2 months in September 2022.
So supplies continue to decrease year by year; We’ve seen a slight month-over-month increase in active listings and monthly supply. Monthly supply may increase further as higher mortgage rates may increase time on market as homes take longer to sell. This data line could quickly return to the four-month supply that I would view as a normal domestic market.
FROM NARA: The average sales price of existing homes rose 2.8% from a year ago to $394,300, marking the third consecutive month of year-over-year price increases.
House prices have shown positive year-over-year growth and continue to trend upward this year. However, one thing to remember when it comes to pricing data is that compilations are now much easier. Last year we saw a decline in home sales and a monthly decline in home prices. So let’s take this into account when we talk about annual data now. The weekly housing market tracker that we publish every weekend will give you real-time insight into current housing prices. Always remember that median sales price data is also seasonal.
We are currently seeing the existing home sales trend continue for many months, with sales and inventory being negative year over year. Going forward, we’re looking at 8% mortgage rates, which means demand is weakening. With three reports left for this year, we’ll see how higher rates impact housing prices.
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