In the past 48 hours, the US housing industry has shown cautious improvement amid ongoing affordability challenges and persistent supply issues. Existing home sales rose 1.5 percent in September, reaching a seasonally adjusted annual rate of 4.06 million units, the fastest pace since February. This recovery is notable considering the market has recently experienced its lowest sales in nearly three decades. Mortgage rates have declined from their 2023 peak, with the current average 30-year fixed rate at 6.19 percent, down from last week and from a high of 8 percent last year. However, a rate drop to around 4.43 percent would be needed to restore broad affordability, a level analysts say is highly unlikely in the near term.
Home prices continue their multiyear rise, up 2.1 percent year-over-year in September to a median price of $415,200, marking the highest ever for this month and more than 50 percent above pre-pandemic levels. Inventory has grown: there were 1.55 million unsold homes at the end of September, a 14 percent increase from last year and a five-year high, though still below pre-pandemic norms. This extra inventory reflects both a slight loosening on the supply side and increased seller caution, as homes linger longer on the market with the median time to sale rising to 33 days from 28 days a year ago.
Cash buyers now make up 30 percent of home purchases, a share that remains high as many buyers are sidelined by high mortgage costs. Builders like Lennar are deploying incentives such as rate buydowns to clear inventory, and new-build completed inventory recently struck a 16-year high. Leaders like Berkshire Hathaway HomeServices note that many homeowners remain locked into low-rate mortgages, further constraining listed inventory amid the so-called golden handcuffs effect.
Compared to the same period last year, the market is showing tentative signs of stabilization as supply and demand edge closer to balance. However, rental units, especially single-family homes, now provide better affordability than ownership in almost every major metro. Wage growth has not kept pace with prices, and the consensus among analysts is the crisis in affordability will persist without a dramatic change in rates or supply. Buyers are more selective, sellers are more patient, and overall transaction volumes are expected to remain steady but muted through year-end.
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