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Existing home sales in February increased to the second highest level since March 2024, according to the National Association of Realtors (NAR). This rebound suggests buyers are slowly entering the market as inventory improves and mortgage rates decline from recent high in January. Despite rates easing, economic uncertainty may continue to constrain buyer activity.

While existing home inventory improves and the Fed continues lowering rates, the market faces headwinds as mortgage rates are expected to stay above 6% for longer due to an anticipated slower easing pace in 2025. These prolonged rates may continue to discourage homeowners from trading existing mortgages for new ones with higher rates, keeping supply tight and prices elevated. As such, sales are likely to remain limited in the coming months due to elevated mortgage rates and home prices.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 4.2% to a seasonally adjusted annual rate of 4.26 million in February. On a year-over-year basis, sales were 1.2% lower than a year ago.

The first-time buyer share was 31% in February, up from 28% in January and 26% from a year ago.

The existing home inventory level was 1.24 million units in February, up from 1.18 million in January, and up 17.0% from a year ago. At the current sales rate, February unsold inventory sits at a 3.5-months’ supply, unchanged from last month but up from 3.0-months’ supply a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction.

Homes stayed on the market for an average of 42 days in February, up from 41 days in January and 38 days in February 2024.

The February all-cash sales share was 32% of transactions, up from 29% in January but down from 33% a year ago. All-cash buyers are less affected by changes in interest rates.

The February median sales price of all existing homes was $398,400, up 3.8% from last year. This marked the 20th consecutive month of year-over-year increases. The median condominium/co-op price in February was up 3.5% from a year ago at $355,100. This rate of price growth will slow as inventory increases.

Existing home sales in February were mixed across the four major regions. Sales rose in the South (4.4%) and West (13.3%), fell in the Northeast (-2.0%), and remained unchanged in the Midwest. On a year-over-year basis, sales increased in the Northeast (4.2%) and Midwest (1.0%), decreased in the South (-4.0%), and were unchanged in the West.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 74.0 to an all-time low of 70.6 in January. This decline suggests elevated home prices and higher mortgage rates continue to constrain affordability. On a year-over-year basis, pending sales were 5.2% lower than a year ago, per National Association of Realtors data.

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The traditional price gap between new and existing homes was nearly nonexistent at the end of 2024. The median price for a new single-family home sold in the fourth quarter of 2024 was $419,200, a mere $9,100 above the existing home sales price of $410,100, according to U.S. Census Bureau and National Association of Realtors data (not seasonally adjusted – NSA).

Typically, new homes carry a price premium over existing homes. However, for the first time in the quarterly data since 1989, the median existing home price exceeded the new home price in the second quarter of 2024, and again in the third quarter of 2024. The average price premium of new home sales over existing home sales for 2024 was $8,725. To put this into perspective, 2023’s premium average was $33,750 and the 10-year average is $50,657.

Both new and existing homes saw dramatic price increases post-pandemic due to higher construction costs and limited supply. Although overall home prices remain elevated compared to historical norms, new home prices have moderated due to builder business decisions, while existing home prices continue to increase due to lean supply.

The median price for a single-family new home sold in the fourth quarter of 2024 decreased by 0.95% from the previous year. New home prices have continued to decline year-over-year for the previous seven quarters.

Meanwhile, the median price for existing single-family homes increased 4.80% from one year ago. Existing home prices have continued to experience year-over-year increases for six consecutive quarters.

There are several factors as to why new and existing homes are selling at similar price points. Tight inventory continues to push up prices for existing homes, as many homeowners who secured low mortgage rates during the pandemic are hesitant to sell due to current high interest rates.

Meanwhile, new home pricing is more volatile – prices change due to the types and locations of homes being built. Despite various challenges facing the industry, home builders are adapting to affordability challenges by selling smaller lots, constructing smaller homes, and offering incentives.

Additionally, there has been a shift in home building toward the South, associated with less expensive homes because of policy effects. In the fourth quarter of 2024, the percentage of new homes sold in the South was 63%, compared to 44% of existing homes (NSA).

The least expensive region for homes in the fourth quarter was the Midwest, with a median price of $368,000 for new homes and $304,800 for existing homes. The South followed closely, with a median new home price of $377,200 and an existing home price of $366,800. New homes were most expensive in the Northeast with a median price of $798,000, while the West sold at $560,000. However, for existing homes, the West led as the most expensive region at $633,500 homes, followed by the Northeast at $487,900.

The new home price premium was most pronounced in the Northeast, where new homes sold for $310,900 more than existing homes. In contrast, the South saw little difference with a modest $10,400—similar to the national trend. Uniquely, this pattern reversed in the West, where existing homes were $72,600 more than new homes.

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After three months of increases, existing home sales retreated in January from the 10-month high last month, according to the National Association of Realtors (NAR). Sales continued to be suppressed by higher mortgage rates, which remained above 6.5% despite the Fed cutting rates by 100 basis points last year. The persistent high mortgage rates largely reflect policy uncertainty and concerns about future economic growth.

While existing home inventory improves and the Fed continues lowering rates, the market faces headwinds as mortgage rates are expected to stay above 6% for longer due to an anticipated slower easing pace in 2025. The prolonged rates may continue to discourage homeowners from trading existing mortgages for new ones with higher rates, keeping supply tight and prices elevated. As such, sales are likely to remain limited in the coming months due to elevated mortgage rates and home prices.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, fell 4.9% to a seasonally adjusted annual rate of 4.08 million in January. On a year-over-year basis, sales were 2.0% higher than a year ago. This marks the fourth consecutive month of annual increases.

The first-time buyer share was 28% in January, down from 31% in December but unchanged from January 2024.

The existing home inventory level rose from 1.14 million in December to 1.18 million units in January and is up 16.8% from a year ago. At the current sales rate, January unsold inventory sits at a 3.5-months’ supply, up from 3.2-months last month and 3.0-months a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction.

Homes stayed on the market for an average of 41 days in January, up from 35 days in December and 36 days in January 2024.

The January all-cash sales share was 29% of transactions, up from 28% in December 2024 but down from 32% in January 2024. All-cash buyers are less affected by changes in interest rates.

The January median sales price of all existing homes was $396,900, up 4.8% from last year. This marked the 19th consecutive month of year-over-year increases. The median condominium/co-op price in December was up 2.9% from a year ago at $349,500. This rate of price growth will slow as inventory increases.

Geographically, three of the four regions saw a decline in existing home sales in January, ranging from 5.7% in the Northeast to 7.4% in the West. Sales in the Midwest remained unchanged. On a year-over-year basis, sales grew in three regions, ranging from 1.4% in the West to 5.3% in the Midwest. Sales were unchanged in the South from a year ago.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 78.5 to 74.2 in December due to elevated mortgage rates. This marks the first decline since August 2024. On a year-over-year basis, pending sales were 5.0% lower than a year ago, per National Association of Realtors data.

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A limited amount of existing inventory along with solid demand helped new home sales end the year on an up note, even as buyers continue to grapple with housing affordability challenges.

Sales of newly built, single-family homes in December increased 3.6% to a 698,000 seasonally adjusted annual rate from an upwardly revised November number, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in December was up 6.7% compared to a year earlier.

New home sales ended 2024 2.5% higher over the 2023 total. NAHB is forecasting a slight gain for sales in 2025 given ongoing solid macroeconomic conditions, particularly for the labor market. Furthermore, builders are cautiously optimistic about the building market given a post-election policy reset that seeks to eliminate unnecessary regulations

A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the December reading of 698,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in December continued to rise to a level of 494,000, up 10% compared to a year earlier. This represents an 8.5 months’ supply at the current building pace.

Completed ready-to-occupy inventory is up 46% to a level of 118,000, compared to a year ago.

NAHB estimates the combined new and existing total months’ supply (8.5 months’ supply for new homes while the much larger resale market was at 3.1) fell to just a 4 months’ supply in December, the lowest since April 2024. The market has not been near a 6 months’ supply, which represents a balanced market, since 2012.

The median new home sale price in December was $427,000, up 2.1% from a year ago.

Regionally, on a year-to-year basis for 2024 totals, new home sales were strongest in the Midwest, up 19% in 2024. Sales also rose 1.7% in the Northeast and 2.6% in the West but declined 0.2% in the South.

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Despite higher mortgage rates and elevated home prices, existing home sales jumped to a 10-month high in December, marking three monthly gains in annual growth, according to the National Association of Realtors (NAR). However, existing home sales end 2024 at 4.06 million, the lowest level since 1995 as the median price reached a record high of $407,500 in 2024. 

While inventory improves and the Fed continues lowering rates, the market faces headwinds as mortgage rates are expected to stay above 6% for longer due to an anticipated slower easing pace in 2025. The prolonged rates may continue to discourage homeowners from trading existing mortgages for new ones with higher rates, keeping supply tight and prices elevated. As such, sales are likely to remain limited in the coming months due to elevated mortgage rates and home prices.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 2.2% to a seasonally adjusted annual rate of 4.24 million in December, the highest level since February 2024. On a year-over-year basis, sales were 9.3% higher than a year ago, the largest annual gain since June 2021. However, total sales in 2024 fell to 4.06 million, breaking below 2023’s record low of 4.10 million and marking the lowest annual level since 1995.

The first-time buyer share rose to 31% in December, up from 30% in November and 29% in December 2023.

The existing home inventory level fell from 1.33 million in November to 1.15 million units in December but is up 16.2% from a year ago. At the current sales rate, December unsold inventory sits at a 3.3-months’ supply, down from 3.8-months last month but up from 3.1-months a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction.

Homes stayed on the market for an average of 35 days in December, up from 32 days in November and 29 days in December 2023.

The December all-cash sales share was 28% of transactions, up from 25% in November 2024 but down from 29% in December 2023. All-cash buyers are less affected by changes in interest rates.

The December median sales price of all existing homes was $404,400, up 6.0% from last year. This marked the 18th consecutive month of year-over-year increases. The median condominium/co-op price in December was up 4.5% from a year ago at $359,000. This rate of price growth will slow as inventory increases.

Geographically, three of the four regions saw an increase in existing home sales in December, ranging from 2.6% in the West to 3.9% in the Northeast. Sales in the Midwest fell 1%. On a year-over-year basis, sales grew in all four regions, ranging from 6.5% in the Midwest to 12.9% in the West.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose from 77.3 to 79.0 in November due to improved inventory. This marks the highest level since February 2023. On a year-over-year basis, pending sales were 6.9% higher than a year ago per National Association of Realtors data.

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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In June, Chief Economist Rob Dietz highlighted the importance of both new and existing home inventory in understanding housing market dynamics, emphasizing that while rising inventory may signal price moderation, the current low levels of resale homes still support home construction and price growth.

Total (new and existing) home inventory is an important measure for gauging and forecasting home prices and home construction impacts. The intuition is clear: more inventory yields weaker or declining home price growth and home building activity. Lean inventory levels lead to price growth and gains for home building.

The metric “months’ supply” is a common measure of current market inventory. For both new and existing home markets, months’ supply converts inventory from a count of homes into a measure of how many months it would take for that count of home inventory to be sold at the current monthly sales pace.

Housing economists typically advise that a balanced market is a five- to six-months’ supply. Larger inventory levels than this benchmark risk producing deteriorating conditions for price growth and building activity.

In the Census May 2024 newly-built home sales data, the current months’ supply of inventory is 9.3. Some analysts have noted that, given the five- to six-month benchmark, that this means the building market for single-family homes is possibly oversupplied, implying declines for construction and prices lie ahead.

However, this narrow reading of the industry misses the mark. First, it is worth noting that new home inventory consists of homes completed and ready to occupy, homes currently under construction and homes that have not begun construction. That is, new home inventory is a measure of homes available for sale, rather than homes ready to occupy. In fact, just 21% of new home inventory in May consisted of standing inventory or homes that have completed construction (99,000 homes).

More fundamentally, an otherwise elevated level of new home months’ supply is justified in current conditions because the inventory of resale homes continues to be low. Indeed, according to NAR data, the current months’ supply of single-family homes is just 3.6, well below the five- to six-month threshold. It is this lack of inventory that has produced ongoing price increases despite significantly higher interest rates over the last two years.

Taken together, new and existing single-family home inventory, the current months’ supply of both markets is just 4.4, as estimated for this analysis. This is admittedly higher than the 3.6 reading, using this approach, from a year ago, but it still qualifies as low. See the following graph for total months’ supply going back to the early 1980s using data from the NAR existing home sales series and the Census new home sales data, as calculated by NAHB.

Yes, inventory is rising and will continue to rise, particularly as the mortgage rate lock-in effect diminishes in the quarters ahead. But current inventory levels continue to support, on a national basis, new construction and some price growth, per this current reading of total months’ supply.

Further, the housing deficit (NAHB estimates about 1.5 million homes), which was produced by a decade of underbuilding due to a perfect storm of supply-side challenges, has generated a separation in the normally co-linear measures of new and existing home months’ supply. This separation became particularly pronounced during the COVID and post-COVID period of the housing market. June 2022 recorded the largest ever lead of new home months’ supply (9.9) over existing single-family home months’ supply (2.9). This separation makes it clear that an evaluation of current market inventory cannot simply examine either the existing or the new home inventory in isolation.

With the current total months’ supply at 4.4, what does this mean for the market, particularly with respect to pricing and construction trends? To examine this question, I calculated the total months’ supply reported on the first graph in this post. I then examined price movements and single-family construction starts data with respect to current total months’ supply. The results are broadly consistent with the existing rules of thumb regarding market conditions.

The horizontal axis plots total months’ supply for monthly data going back to the start of 1988 (the starting point of the price data used for this analysis). The vertical axis records the corresponding year-over-year home price growth for the same month as measured by the Case-Shiller Home Price Index. The trend line is estimated using a simple linear regression. The statistical correlation indicates that home price growth, on average, turns negative when inventory reaches an 8-months’ total supply (on the graph, the trend line intersects the horizontal axis, measuring zero percent price growth, at 8 months’ supply).

To be clear, this does not mean that prices will not fall until months’ supply exceeds eight. For example, 24% of the data registering 6.5 to 7.5 months’ supply recorded home price declines. For the data in the range of 7.5 months’ supply to less than 8 months’ supply, this share increased to 36%. Overall, for months with less than an eight months’ supply, it was less likely than not to see home price declines, but it did happen in certain market conditions.

And to be complete, home prices did not always fall when total inventory was greater than an eight months’ supply. For example, for months with a months’ supply measure of 8.5 to 9.5, homes prices increased 36% of the time.

Taken together, these general trends indicate that a months’ supply of less than eight has historically been positive for nominal home price growth. That’s where market conditions are today.

What about impacts for single-family home building? The data are little less clear (as seen by smaller R-squared measures on the trends), but this should not be a surprise. Home building is a function of both demand-side housing factors, like mortgage interest rates, as well as volatile supply-side variables like the cost and availability of labor, lots, lending, lumber/materials, and legal/regulatory policies and fees. Nonetheless, using Census housing starts data and the same total months’ supply metric, a trend is apparent, and it is one that matches up well with existing rules of thumb.

As the chart above indicates, a simple linear trend of monthly data going back to mid-1982 (the limit of the supply data) indicates that at roughly 6-months’ total home inventory, single-family home building reaches a zero percent year-over year growth rate. As before, and as seen in the graph above, the correlation is not absolute.

For example, for otherwise tight 4.5 months’ to 5.5 months’ new and existing home supply, single-family home building did contract 27% of the time. On the other hand, for markets with more inventory than the benchmark (6.5 to 7.5 months’ supply), home building expanded 30% of the measured months. As with home prices, the trend is not absolute, but the six-months’ supply benchmark is a useful rule of thumb for examining whether builders will reach a neutral stance for expanding home construction activity.

It is worth noting that home builder production can occur with a lag with respect to inventory conditions. For example, the time between permit approval and the start of construction was approximately 1.3 months in 2022 (2023 data will be available in the coming months). And single-family construction time averaged 8.3 months, per NAHB estimates using Census data. Mindful of these lags, I examined the impact of total months’ supply on single-family starts with both a three-month and six-month lag. In both analyses, the 6-months’ benchmark was again validated. For a relatively straightforward analytical approach, this represents a fairly robust result, albeit one with a notable amount of statistical noise due to supply-side factors associated with construction inputs and constraints.

The data thus show that current market conditions are unusual, with a large gap between new and existing single-family months’ supply. Analyses that rely on just one of these measures will be misleading. A total months’ supply measure that measures both new and existing inventory is required to gauge the status of inventory conditions and possible impacts on home prices and home building.

Furthermore, the historical correlations suggest that home builders will significantly slow home building activity at a 6-months’ supply of total housing inventory. And price declines become more likely than not at an 8-months’ supply.  

In the meantime, builders, housing stakeholders, and analysts should view the current nine months’ supply for new homes within its proper context. This will be particularly important as resale levels continue to rise, with additional gains expected to occur as the mortgage-rate lock-in effect diminishes in the quarters ahead. However, keep in mind, lower mortgage rates will also unambiguously improve housing affordability conditions and price prospective home buyers back in the market, thus putting downward pressure on the months’ supply metric by increasing sales rates.

With each Census new home sales report, NAHB will continue to estimate and watch the total months’ supply measure. But given this analysis, at 4.4 total months’ supply, inventory levels have increased but remain low and supportive of limited gains for home building and upward pressure on nominal home prices.

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Despite higher mortgage rates and elevated home prices, existing home sales jumped to an 8-month high in November, marking the second month of annual increase in more than three years, according to the National Association of Realtors (NAR).

While inventory improves and the Fed continues lowering rates, the market faces headwinds as mortgage rates are expected to stay above 6% for longer due to an anticipated slower easing pace in 2025. The prolonged rates may continue to discourage homeowners from trading existing mortgages for new ones with higher rates, keeping supply tight and prices elevated. However, as mortgage rates continue trending lower, the gradual improvement in inventory should help slow home price growth and enhance affordability. As such, the recent gains for existing home sales may give way in the coming months of data.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 4.8% to a seasonally adjusted annual rate of 4.15 million in November, the highest level since March 2024. On a year-over-year basis, sales were 6.1% higher than a year ago, the largest annual gain since June 2021.

The first-time buyer share rose to 30% in November, up from 27% in October but down from 31% in November 2023.

The existing home inventory level fell from 1.37 million in October to 1.33 million units in November but is up 17.7% from a year ago. At the current sales rate, November unsold inventory sits at a 3.8-months supply, down from 4.2-months last month but up 3.5-months a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction.

Homes stayed on the market for an average of 32 days in November, up from 29 days in October and 25 days in November 2023.

The November all-cash sales share was 25% of transactions, down from 27% experienced in both October 2024 and November 2023. All-cash buyers are less affected by changes in interest rates.

The November median sales price of all existing homes was $406,100, up 4.7% from last year. This marked the 17th consecutive month of year-over-year increases. The median condominium/co-op price in November was up 2.8% from a year ago at $359,800. This rate of price growth will slow as inventory increases.

Geographically, three of four regions saw an increase in existing home sales in November, ranging from 5.3% in the Midwest to 8.5% in the Northeast. Sales in the West stayed unchanged in November. On a year-over-year basis, sales grew in all four regions, ranging from 3.3% in the South to 14.9% in the West.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose from 75.9 to 77.4 in October due to improved inventory. On a year-over-year basis, pending sales were 5.4% higher than a year ago per National Association of Realtors data.

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Existing home sales in October rebounded from a 14-year low and posted the first annual increase in more than three years, as buyers took advantage when mortgage rates briefly reached a 2-year low in late September, according to the National Association of Realtors (NAR). While elevated home prices persist due to the lock-in effect, we expect sales activity to increase as mortgage rates moderate with additional Fed easing. Improving inventory should help slow home price growth and enhance affordability.

Homeowners with lower mortgage rates have opted to stay put, avoiding trading existing mortgages for new ones with higher rates. This trend is driving home prices higher and holding back inventory. With the Federal Reserve beginning its easing cycle at the September meeting, mortgage rates are expected to gradually decrease, leading to increased demand and unlocking lock-in inventory in the coming quarters. Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 3.4% to a seasonally adjusted annual rate of 3.96 million in October. On a year-over-year basis, sales were 2.9% higher than a year ago, ending a 38-month streak of year-over-year declines since July 2021.

The first-time buyer share rose to 27% in October, up from 26% in September but down from 28% in October 2023.

The existing home inventory level rose from 1.36 million in September to 1.37 million units in October and is up 19.1% from a year ago. At the current sales rate, September unsold inventory sits at a 4.2-months supply, down from 4.3-months last month but up 3.6-months a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction.

Homes stayed on the market for an average of 29 days in October, up from 28 days in September and 23 days in October 2023.

The October all-cash sales share was 27% of transactions, down from 30% in September and 29% a year ago. All-cash buyers are less affected by changes in interest rates.

The October median sales price of all existing homes was $407,200, up 4.0% from last year. This marked the 16th consecutive month of year-over-year increases. The median condominium/co-op price in October was up 1.6% from a year ago at $360,300. This rate of price growth will slow as inventory increases.

Geographically, all four regions saw an increase in existing home sales in October, ranging from 1.3% in the West to 6.7% in the Midwest. On a year-over-year basis, sales rose 1.1%, 2.3%, and 8.5% in the Midwest, South and West. Sales in the Northeast stayed unchanged.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose from 70.6 to 75.8 in September due to improved inventory and lower mortgage rates in late summer. On a year-over-year basis, pending sales were 2.6% higher than a year ago per National Association of Realtors data.

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Despite recent easing mortgage rates and improved inventory, existing home sales fell to a 14-year low in September as elevated home prices are causing potential buyers to hold out for lower rates, according to the National Association of Realtors (NAR). Sales remained sluggish as the lock-in effect kept home prices elevated. However, we expect increased activity in the coming months as mortgage rates moderate with additional Fed easing. Improving inventory should help slow home price growth and enhance affordability.

Homeowners with lower mortgage rates have opted to stay put, avoiding trading existing mortgages for new ones with higher rates. This trend is driving home prices higher and holding back inventory. With the Federal Reserve beginning its easing cycle at the September meeting, mortgage rates are expected to gradually decrease, leading to increased demand and unlocking lock-in inventory in the coming quarters.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, fell 1.0% to a seasonally adjusted annual rate of 3.84 million in September, the lowest level since October 2010. On a year-over-year basis, sales were 3.5% lower than a year ago.

The first-time buyer share remained at 26% in September, matching the lowest level since November 2021 and August 2024, but down from 27% in September 2023.

The existing home inventory level rose from 1.37 million in August to 1.39 million units in September and is up 23.0% from a year ago. At the current sales rate, September unsold inventory sits at a 4.3-months supply, up from 4.2-months last month and 3.4-months a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction. However, the count of single-family resale homes available for sale is up almost 22.2% on a year-over-year basis.

Homes stayed on the market for an average of 28 days in September, up from 26 days in August and 21 days in September 2023.

The September all-cash sales share was 30% of transactions, up from 26% in August and 29% a year ago. All-cash buyers are less affected by changes in interest rates.

The September median sales price of all existing homes was $404,500, up 3.0% from last year. This marked the 15th consecutive month of year-over-year increases and the highest level for the month of September. The median condominium/co-op price in September was up 2.2% from a year ago at $361,600. This rate of price growth will slow as inventory increases.

Existing home sales in September were mixed across the four major regions. In the Northeast, Midwest, and South, sales fell by 4.2%, 2.2%, and 1.7%, respectively, while sales in the Midwest rose by 4.1%. On a year-over-year basis, sales decreased in the Northeast (-6.1%), Midwest (-5.3%) and South (-5.5%). Sales in the West increased 5.6% from a year ago.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose from 70.2 to 70.6 in August due to lower mortgage rates. On a year-over-year basis, pending sales were 3.0% lower than a year ago per National Association of Realtors data.

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Existing home sales fell to a 10-month low in August despite easing mortgage rates and improved inventory, according to the National Association of Realtors (NAR). Home sales remained sluggish as the lock-in effect kept home prices elevated. Meanwhile, the share of first-time buyer in August dropped to a record low. However, we expect increased activity in the coming months as mortgage rates continue to moderate. Improving inventory is likely to ease home price growth and enhance affordability.

Homeowners with lower mortgage rates have opted to stay put, avoiding trading existing mortgages for new ones with higher rates. This trend is driving home prices higher and holding back inventory. With the Federal Reserve beginning its easing cycle at the September meeting, mortgage rates are expected to gradually decrease, leading to increased demand and unlocking lock-in inventory in the coming quarters.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, fell 2.5% to a seasonally adjusted annual rate of 3.86 million in August, the lowest level since October 2023. On a year-over-year basis, sales were 4.2% lower than a year ago.

The first-time buyer share dropped to 26% in August, the lowest level since November 2021, down from 29% in both July and August 2023.

The existing home inventory level rose from 1.34 million in July to 1.35 million units in August and is up 22.7% from a year ago. At the current sales rate, August unsold inventory sits at a 4.2-months supply, up from 4.1-months last month and 3.3-months a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction. However, the count of single-family resale homes available for sale is up almost 21.4% on a year-over-year basis.

Homes stayed on the market for an average of 26 days in August, up from 24 days in July and 20 days in August 2023.

The August all-cash sales share was 26% of transactions, down from 27% in both July and a year ago. All-cash buyers are less affected by changes in interest rates.

The August median sales price of all existing homes was $416,700, up 3.1% from last year. This marked the 14th consecutive month of year-over-year increases. The median condominium/co-op price in August was up 3.5% from a year ago at $366,500. This rate of price growth will slow as inventory increases. Existing home sales in August were mixed across the four major regions. In the Northeast, South, and West, sales fell by 2.0%, 3.9%, and 2.7%, respectively, while sales in the Midwest remained unchanged. On a year-over-year basis, sales decreased in the Midwest (-5.2%), South (-6.0%) and West (-1.4%). Sales in the Northeast were unchanged from a year ago.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 74.3 to 70.2 in July due to persistent affordability challenges. On a year-over-year basis, pending sales were 8.5% lower than a year ago per National Association of Realtors data.

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