T
he US housing market continues to struggle, with home sales plummeting due to high prices and elevated mortgage rates. According to data from the National Association of Realtors, existing home sales in September fell 1% from August to a seasonally-adjusted annual rate of $3.84 million, the lowest monthly rate since October 2010. This decline exceeded economists' expectations and marks the second consecutive year that home sales have hit levels seen three decades ago.

    Despite expectations for an increase in sales this year, home affordability remains low due to elevated prices and a shortage of housing supply. Mortgage rates, which had been expected to drop following the Federal Reserve's interest rate cut last month, instead ticked up for three straight weeks to reach their highest levels since August. This has made borrowing costs even more expensive.

    Mortgage applications have fallen for four consecutive weeks, and lenders are selling mortgages to investors who demand higher returns due to the current high rates. A drop in mortgage rates at the end of this year or next could ease affordability concerns, but rising home prices would offset any benefits.

    The national median existing home price in September was $404,500, a 3% increase from the previous year and the highest median price for any September on record. The housing market has been a key issue in the presidential election, with both candidates promising to address home affordability concerns.

    While some real estate agents expect buyers to re-enter the market in early 2025, others believe that the current decline in sales is temporary and that buyers will eventually return. For now, those who are able to participate in the housing market are benefiting from lower competition and increased negotiating power due to the decreased demand. Houses typically sat on the market for nearly a month in September, up from 21 days a year earlier.

    The number of houses sold or in contract rose by 23% in September, but still failed to reach normal levels in many markets. Many potential sellers are opting to keep their homes rather than take on a new mortgage with less favorable rates. At the current sales pace, there was a 4.3-month supply of homes on the market at the end of September, lower than what is considered a balanced market between buyers and sellers.