Americans bought fewer existing homes in September, a sign that some prospective home buyers have finally started to feel the pinch of higher mortgage rates.
Sales of existing homes fell nearly 2 percent in September from the previous month but are still nearly 11 percent higher than a year ago, according to data released Monday by the National Association of Realtors. The number of homes sold was at a seasonally adjusted annual rate of 5.3 million, down from 5.4 million in August.
September’s drop was largely in line with expectations by analysts, who say that sales will probably slow down for the rest of the year as rising mortgage rates make homes less affordable for some. The average 30-year fixed-rate mortgage reached 4.28 percent last week, according to mortgage-financing company Freddie Mac.
There was a temporary sales spike in August, as buyers rushed to lock in low mortgage rates, pushing sales to a six-year high. But that is unlikely to continue, analysts said.
“We anticipate further declines in the coming months as affordability is getting hit,” said Lawrence Yun, the Realtor group’s chief economist. Affordability fell to a five-year low because income growth hasn’t kept pace with home prices, he said.
Another factor weighing on the housing market, at least temporarily, is the government shutdown, analysts said. Monday’s data release reflects September sales, so the effects of the shutdown will not be clear until next month. Many home buyers faced delays in getting approval for home loans or mortgage applications because federal agencies were closed.
The delays that show up in October are likely to correct themselves in November and December data, Yun said.
The economic uncertainty created by the shutdown and Washington’s debt-ceiling battles could spook some buyers into postponing big purchases, analysts said, adding that others might shrug off the events as political bickering.
“It’s definitely a cloud hanging over everyone’s head,” said Brad Doremus, senior analyst at Reis, a New York-based real estate research firm.
Tight inventory remains a key obstacle for home buyers, said Patrick Newport, chief economist at IHS Global Insight. The supply of homes for sale in September was unchanged at 2.2 million homes. It would take five months to run through the inventory, better than August’s rate of 4.9 months. Six months of inventory is generally considered healthy for the housing market. Unsold inventory is 1.8 percent higher than a year ago, the report said.
“We’re still not building enough homes,” Newport said.
Sales in the South, which include the Washington area, fell 1.4 percent from the previous month, to an annual level of 2.1 million homes. The median home price was $171,600, nearly 14 percent higher than a year ago. The national median home price was $199,200, nearly 12 percent higher than last year.