The National Association of Realtors® announced that existing home sales declined somewhat in September as expected. The number of existing home sales fell from an annualized 5.39 million in July and August to 5.29 million in September. Even with the lower figure, sales continue to be higher than what was experienced earlier in the year, including 5.06 million observed three months ago (June) and 4.94 million six months ago (February).
With that said, a retreat in existing home sales was anticipated with the recent run-up in mortgage rates. When the Federal Reserve chose not to taper at its September meeting, as was widely predicted, mortgage rates have retreated a bit, but still remain higher than a few months ago. According to Freddie Mac, the average 30-year fixed-rate mortgage last week was 4.28 percent, up from 3.35 percent during the week of May 2 but below the 4.57 percent average seen during the week of September 12.
Overall, the housing market continues to be healthy, even with the latest pause, and once individuals become more accustomed to the higher rates – which I have dubbed “sticker shock” – sales should begin pick up again. There were 5.0 months of inventory on the market in September, up from 4.9 months in August. Meanwhile, the median home price was $199,200, up 11.7 percent on a year-over-year basis from 12 months before.
Despite the longer-term positive outlook, the government shutdown might have an impact on October figures, particularly with delays in mortgage loan approvals.
Chad Moutray is the chief economist, National Association of Manufacturers.