Home Sales on Track for Worst Year Since 1995: September Sees Sharp Decline
- Miguel Virgen, PhD Student in Business
- Nov 11, 2024
- 3 min read
Updated: Mar 12
U.S. home sales are on track to record their worst performance in nearly three decades, with September 2024 marking a significant downturn in the housing market. The latest data shows that home sales fell by 3.5% compared to September 2023, continuing a troubling trend that has seen the housing market reach its lowest point in 30 years. This marks a stark contrast to the rapid post-pandemic recovery in the housing market, and experts are warning that the full-year results could be the worst since 1995.
September's decline was particularly concerning as it marked the 13th consecutive month of year-over-year sales declines. In total, existing home sales for the month fell to an annualized rate of 3.6 million units, the lowest level recorded since 1993. The falloff was felt across multiple price points and regions, with the overall decline largely attributed to a combination of persistently high mortgage rates, affordability challenges, and limited housing inventory.
Sales of previously owned homes have been under pressure since the Federal Reserve raised interest rates to curb inflation, and with rates remaining above 7%, mortgage affordability has remained a significant hurdle for buyers. As borrowing costs rise, potential homebuyers are being priced out of the market, contributing to reduced demand and further downward pressure on sales.
The biggest factor behind the continued decline in home sales has been the persistent high mortgage rates. In September, the average rate for a 30-year fixed mortgage stayed at 7.5%, a level not seen in over 20 years. These elevated rates have led many would-be buyers to sit on the sidelines, unsure if the cost of homeownership fits within their budget.
For many homeowners, the allure of holding on to low-interest mortgages has led to a decrease in the number of homes available for sale, compounding the inventory shortages. New listings have been slow to materialize as potential sellers hesitate to give up their low-rate mortgages. As a result, the supply of available homes remains constrained, further driving up prices in some areas, which only adds to the affordability problem.
A Market Not Seen Since 1995
Experts are now projecting that the full-year 2024 home sales total will be the lowest in nearly 30 years. If the current pace continues, the market could close out the year with fewer than 4 million homes sold—levels not seen since 1995, when the U.S. was in the midst of a housing market downturn and a broader economic slowdown.
This slowdown marks a significant reversal of fortunes for the housing market, which had been soaring for much of the past decade. The early 2020s saw a boom in home sales, fueled by ultra-low mortgage rates and a rush of buyers seeking homes in the wake of the pandemic. However, that boom was unsustainable, and with interest rates now significantly higher, the market has cooled considerably.
With home sales in September 2024 falling by 3.5% compared to the same month last year, the housing market is on track to experience its worst year since 1995. A combination of high mortgage rates, reduced affordability, and a stubborn inventory shortage has left many would-be buyers and sellers on the sidelines. As we move toward the end of the year, the housing market's slow pace suggests that 2024 will be a year to forget for many in the industry, with only limited signs of recovery on the horizon.
Boost your business operations with our expert Marketing Services, Call Center Solutions, and Virtual Assistant Support. Whether you need to increase sales, enhance customer service, or streamline daily tasks, we’ve got you covered. Let’s take your business to the next level. Browse the services we offer to see how we can help your business grow.
Keywords:
Home Sales on Track for Worst Year, Economics explained, Economic theories, Global economic impact, Economic policy analysis, Fiscal and monetary policy, Economic indicators, International trade theory, GDP and economic output, Income inequality and economics, Sustainable economic development, Global financial markets, International economic relations, Trade and development economics, Learn economics online, Study economics, Economic analysis for business owners, Economics articles for students, Current economic issues explained.
