Existing-home sales in the South declined to an annualized rate of 1.72 million units in September, representing a 1.7% drop from the previous month and marking the lowest sales level since October 2023.
- On a year-over-year basis, sales in the region are down 5.5%, reflecting ongoing challenges in the housing market as buyers grapple with high prices and elevated mortgage rates.
Prices Still Up: Despite the slowdown, the median home price in the South rose by 0.8% compared to the same time last year, reaching $359,700 in September. The region remains a significant player in the national housing market, accounting for 44.8% of all existing-home sales across the country.
A Down Month: The downturn in the South mirrors a broader national trend, with existing-home sales falling by 1.0% month-over-month in September. This decline was more pronounced than economists’ expectations, which had forecasted a modest 0.5% increase. The impact extended beyond the South: existing-home sales in the Northeast and Midwest fell 4.3% and 2.2%, respectively.
- The West was the only region to buck the trend, with sales increasing by 4.1% to a seasonally adjusted annual rate of 760,000 units.
Affordability Issues: One of the key factors weighing on the market is the persistence of elevated home prices and mortgage rates, which continue to hinder affordability, especially for first-time buyers. First-time homebuyers accounted for just 26% of all transactions in September, matching a record low first set in August 2024 and previously seen in November 2021. This figure is also down from 27% in September 2023.
- As borrowing costs remain high, there has been a notable increase in cash transactions, which made up 30% of home sales in September, up from 26% in August and 29% in the same month last year.
Inventory: One positive development amid the sluggish sales environment is the rise in housing inventory. Total inventory at the end of September reached 1.39 million units, up 1.5% from August and a substantial 23.0% increase year-over-year.
- The supply of unsold homes now sits at 4.3 months at the current sales pace, compared to 4.2 months in August and 3.4 months in September 2023, offering prospective buyers more choices in a tight market.
What They’re Saying: Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), noted that overall home sales have remained relatively depressed at around 4 million units over the past year. However, he pointed to potential improvements in 2025. “There are more inventory choices for consumers, lower mortgage rates than a year ago, and continued job additions to the economy. Perhaps, some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Bottom Line: High home prices, elevated mortgage rates, and uncertainty surrounding the upcoming election are creating a challenging environment for the housing market. While there are some signs of improvement in inventory, a more favorable outlook for home sales may not materialize until next year.
