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Existing-home sales in U.S. extend decline to longest since 2007

Oct. 20, 2022 Updated Thu., Oct. 20, 2022 at 7:51 p.m.

A prospective home buyer looks out the master bedroom window at a house for sale in Dunlap, Ill., in August 2018.  (Daniel Acker/Bloomberg)
A prospective home buyer looks out the master bedroom window at a house for sale in Dunlap, Ill., in August 2018. (Daniel Acker/Bloomberg)
From staff and wire reports Bloomberg

From staff and wire reports

Sales of previously owned U.S. homes fell for an eighth straight month in September, underscoring how soaring mortgage rates are punishing the housing market.

Contract closings declined 1.5% to an annualized pace of 4.71 million last month, the slowest since May 2020, according to data from the National Association of Realtors on Thursday. The figure was in line with the median projection in a Bloomberg survey of economists.

The stretch of monthly declines is the longest since 2007, when a housing market collapse swept the economy into the Great Recession. Home sales this year have deteriorated rapidly as the Federal Reserve kicked off an aggressive campaign to crush inflation with huge interest-rate hikes.

“We are not yet at the bottom,” Lawrence Yun, NAR’s chief economist said on a call .

Yun expects the figures to keep deteriorating, given that the current data is not reflective of where mortgage rates are now.

Mortgage rates stand at a two-decade high, and applications to purchase or refinance a home have crumbled to levels not seen since 1997.

“Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” Yun said in a statement. “The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”

The median selling price increased 8.4% from a year earlier to $384,800. Even so, that’s the lowest since March.

In the Spokane area, the county’s housing market is beginning to cool off following a record-breaking median price of $450,000 in May. In Spokane County, 596 single-family homes and condos on less than 1 acre sold in September, a 29.9% decrease compared to 850 homes in September 2021, according to the Spokane Association of Realtors.

The county’s median closing price for homes and condos on less than 1 acre was $409,950 in September, a 7.9% increase compared to September 2021’s median of $380,000, according to the Realtors association. The median in August was $416,450.

The county’s housing inventory was 1.8 months in September, a 69.4% increase compared to less than a month of supply in September 2021. That means it would take nearly two months to sell all homes listed on the market.

The last time housing inventory in the county was 1.8 months was in June 2019, according to Realtors association data.

In Kootenai County, 2,056 homes sold in September, down 22.1% from the same time last year, according to Coeur d’Alene Regional Realtors. The median home price for homes less than 2 acres in the county was $550,462, up 15.9% from September 2021.Nationally, other data released earlier this week showed builders are pulling back as well. Beginning construction of single-family homes dropped to a two-year low, and homebuilder sentiment has fallen every month this year.

The number of homes for sale declined from August to 1.25 million. At the current sales pace it would take 3.2 months to sell all the homes on the market, up from 2.4 months in September 2021. Realtors see anything below five months of supply as indicative of a tight market.

Properties remained on the market for longer in September, and 70% of homes sold were on the market for less than a month, down from 81% in August.

Sales fell in three of four regions, including a 1.9% drop in the South. The Fort Myers and Tampa regions of Florida saw a marked drop in purchases in the aftermath of Hurricane Ian, Yun said. He described the disruption as temporary.

Sales in the West were unchanged from a month earlier, though down more than 31% from a year ago.

First-time buyers made up 29% of purchases in September, the same share as a month earlier. Yun noted distressed sales are inching higher, though they remain historically low.

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