Existing home sales fell to their lowest level in 14 years in September, despite mortgage rates hitting their lowest level in over a year last month.
Existing home sales in September fell 1% to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors reported on Thursday. That is lower than economists had expected and raises alarms about the state of the housing market. Home sales are still down 3.5% compared to a year ago.
In an election year where every economic data point is closely scrutinized, the further slide in the housing market is bad news for Vice President Kamala Harris, whose record is inexorably tied to President Joe Biden.
Housing inventory has been growing. Total inventory of existing homes was 1.39 million units in September, up 1.5% from the month before, and up 23% from a year ago.
Economists are hoping that the lower mortgage rates, coupled with more housing inventory, will eventually translate to the housing market heating up, but this latest report, the last before the Nov. 5 elections, doesn’t show that the dynamics are rapidly changing.
“Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” said NAR’s chief economist Lawrence Yun. “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,” he added.
As of Thursday morning, the average rate on a 30-year, fixed-rate mortgage was at 6.85%, according to Mortgage News Daily, which tracks daily changes in rates. That is up from a trough in September, the month the latest data are tracking, where rates fell to about 6.14%.
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“High mortgage rates and high prices remain significant obstacles for buyers,” High-Frequency economics analysts wrote in a report on the data release Wednesday. “Expectations of lower mortgage rates to come are an incentive for them to defer purchases if they do not have to move. Once rates are actually low again — we assume they will be considered low by buyers at some point in the next year, cheap financing will support home sales.”
Housing affordability is a major issue on the campaign trail, given that voters are already struggling to afford goods like groceries because of the country’s worst bout of inflation in generations.