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U.S. existing home sales reached a seven-month high in September, driven primarily by higher-priced properties. Mortgage rates fell to one-year lows, but demand for new purchase loans remains modest, with many homeowners refinancing instead. Inventory increased by 14%, offering buyers more choice, though levels are still below pre-pandemic norms. First-time buyers accounted for 30% of sales. Economic uncertainty, a cautious labor market, and government shutdown-related delays continue to limit broad-based growth. Affordability challenges persist, particularly for lower and middle-income households, shaping the housing market.
U.S. existing home sales rose to a seven-month high in September, with most gains seen in higher-priced properties, even as affordability remains a significant challenge for many prospective buyers. The National Association of Realtors reported that the increase in home resales was mainly among higher-income households benefiting from stock market gains. Advertisement
Mortgage rates have declined to a one-year low of 6.19% on the popular 30-year fixed mortgage, down from 7.04% earlier this year. Despite this, demand for new purchase loans remains modest, as many homeowners are using the lower rates to refinance existing mortgages rather than buy new homes. Economists say affordability has improved slightly but continues to be close to the challenging levels of recent years.
Home sales rose 1.5% last month to a seasonally adjusted annual rate of 4.06 million units, the highest since February. Sales increased in the Northeast, South, and West, while the Midwest saw a decline. Compared with the same period last year, resales were up 4.1%. Most sales in September reflected contracts signed in July and August when mortgage rates began easing in anticipation of possible Federal Reserve interest rate cuts.
Higher-priced homes led the market's growth. Sales of properties priced USD 1 million and above jumped 20.2% year-over-year, and those in the USD 750,000-1 million range rose 14.4%. In contrast, homes priced between USD 100,000 and 250,000 increased by just 6%. First-time buyers accounted for 30% of sales, up from 26% a year ago, though analysts suggest a 40% share is needed for a robust market. All-cash sales remained steady at 30%, and distressed sales, including foreclosures, held at 2%.
The inventory of existing homes rose 14% year-over-year to 1.55 million units, still below pre-pandemic levels of 1.8 million. Redfin reported 36.7% more sellers than buyers, a near-record imbalance, offering more choice and potential for price negotiation. At the current pace, it would take 4.6 months to exhaust existing inventory, compared with 4.2 months a year ago. Homes stayed on the market for an average of 33 days, slightly longer than 28 days previously.
Economic uncertainty and a slow labor market are affecting housing demand. The recent U.S. government shutdown has delayed some contract closings, particularly in flood-prone areas where the National Flood Insurance Program remains suspended. Analysts also note that some lower-income households are struggling with debt, including automobile loans, which could affect future distressed sales. Overall, the housing market shows resilience in higher-value segments, while affordability and economic factors continue to shape broader activity.
Source Reuters
5th Jun, 2025
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