According to the monthly index released by the National Association of Realtors (NAR) on Thursday, the inventory of existing homes for sale increased by 1.1% in September. However, due to insufficient housing listings, the year-on-year inventory of homes for sale remains low.
In fact, this is the second-lowest value tracked by the NAR since it began monitoring this data in 2001. Sales have declined by 11% compared to the same period last year.
Nevertheless, the sales pace exceeded expectations on Wall Street. Economists expected a 1.5% decline in existing home sales in September. The sale of homes awaiting sale reflects signed contracts for existing home sales that have not yet closed, making it an indicator of the direction of existing home sales in the coming months, according to economists.
The NAR also released its latest forecast for existing home sales. They predict a 17.5% decline in sales volume in 2023, dropping to 4.15 million units, which would be the slowest pace since 2008. However, the NAR stated that due to low inventory, the median home price is expected to rise by 0.1% in 2023 to $386,700.
Furthermore, the NAR anticipates a rebound in home sales in 2024, with a 13.5% increase to 4.71 million units. They also forecast a 0.7% increase in home prices next year, reaching $389,500.
Lawrence Yun, the chief economist of the NAR, stated that while mortgage rates continue to rise, the ability of homebuilders to create more inventory might lead to higher new home sales this year. This underscores the importance of increasing inventory in driving overall housing market growth.
However, the US housing market is facing issues on both the supply and demand sides. On one hand, high mortgage rates are deterring buyers, while on the other hand, low inventory is causing home prices to rise, further dissuading potential buyers. The NAR expects the pace of existing home sales to drop to the slowest level in 15 years, a time when the US was in the midst of an economic downturn triggered by the subprime crisis.
