WASHINGTON, Oct 13 (Reuters) – US existing home sales unexpectedly increased in September as rising inventory offered buyers more choice, but the trend remained subdued against the backdrop of higher mortgage rates.
Home sales rose 1.5% last month to a seasonally adjusted annual rate of 3.99 million units, the National Association of Realtors said on Tuesday. Economists polled by Reuters had forecast home resales would decline to a rate of 3.95 million units.
Sales dropped 2.2% on a year-over-year basis in September.
“Despite the small monthly gain on a seasonally adjusted basis, August and September marked the two slowest months for home sales this year,” said Lawrence Yun, the NAR’s chief economist. “Further increases in mortgage rates in recent weeks mean fewer buyers can qualify to purchase a home.”
Mortgage rates have been on an upward trend since the US-Israeli war with Iran started at the end of February. The conflict is fanning inflation and boosting US Treasury yields, which mortgage rates track.
The 30-year fixed mortgage rate averaged 7.40% last week, the highest level since November 2023, compared with 7.28% in the prior week, data from mortgage finance agency Freddie Mac showed. The rate has soared by 142 basis points since the end of February.
Sales increased in the South and West regions, but fell in the Northeast and were unchanged in the Midwest.
Existing housing inventory rose 1.9% to 1.60 million units, the highest level since November 2019. Supply was 4.6% higher than a year ago. At September’s sales pace, it would take 4.8 months to exhaust the current inventory of existing homes, unchanged from August, but up from 4.5 months a year ago.
The median existing home price last month increased 1.3% from a year ago to $417,500, the highest for any September. First-time buyers accounted for 31% of sales, up from 30% in August and a year ago. A 40% share in this category is needed for a robust housing market.
The median number of days on the market for listed properties climbed to 33 from 31 in August, but was unchanged from a year ago. Distressed sales, including foreclosures, were unchanged at 2%. The share of cash transactions was unchanged from August at 27%, but declined from 30% a year ago.
Individual investors or second-home buyers accounted for 20% of transactions, up from 15% in August and a year ago.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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