Oct. 19, 2023 at 7:00 am

Home sales are down, cash is king and first-time buyers are suffering

October 19, 2023no commentNo tags

Mortgage rates approaching 8% and a lack of housing inventory are continuing to keep potential homebuyers − especially first-time buyers − out of the market.

Existing-home sales fell 2% in September to 3.96 million, down 15% from one year ago, according to a report from the National Association of Realtors released Thursday.

Meanwhile, median existing home sales price dropped from $404,100 in August to $394, 300 in September. However, it was up 2.8% higher than one year ago, marking the fourth consecutive year-over increase.

“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”

Mortgage rates and housing market

This week, mortgage rates averaged 7.63% for a 30-year conventional loan this week, according to newly released data Thursday by Freddie Mac.

Learn more: Best personal loans

“Mortgage rates continued to approach eight percent this week, further impacting affordability,” said Sam Khater, Freddie Mac’s Chief Economist. “In this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate.”

Housing:‘It’s still a seller’s market’ despite mortgage rates hitting 23-year high

First-time homebuyers, for whom down payment is often one of the biggest barriers, should also ask their lender about down payment assistance, advised Khater.

It’s not just the homebuyers feeling the impact of rising rates. Incoming data suggests home builders are feeling the pinch, too, according to Khater.

Housing inventory

Total housing inventory registered at the end of September was 1.13 million units, up 2.7% from August but down 8.1% from one year ago (1.23 million). Unsold inventory sits at a 3.4-month supply at the current sales pace, up from 3.3 months in August and 3.2 months in September 2022.

First-time buyers were responsible for 27% of sales in September, down from 29% in August. Last November, the annual share of first-time buyers was 26, the lowest since 1999, when NAR began tracking the data. Before the pandemic, first-time buyers typically accounted for close to 40% of the transactions, says Yun.

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Home sales are down, cash is king and first-time buyers are suffering

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