The U.S. real estate market continues to slow as we move into fall, as rising consumer prices and higher mortgage interest rates squeeze homebuyer budgets and cool activity. With inflation showing little sign of abating, the Federal Reserve implemented another 75-basis-point hike in September, marking the third such rate increase this year. The cost of borrowing has reached multi-year highs on everything from credit cards to auto loans in 2022 as mortgage interest rates topped six percent for the first time since 2008, causing existing home sales to decline for the seventh consecutive month.
New listings decreased by 13.7% for residential homes and 24.7% for townhouse/condo homes. Pending sales decreased by 14.3% for residential homes and 23% for townhouse/condo homes. Inventory decreased by 4.6% for residential homes and 37.4% for townhouse/condo homes.
Median sales price increased 2.7% to $269,000 for residential homes and 4.1% to $203,000 for townhouse/condo homes. Days on market increased by 12% for residential homes but decreased by 8.7% for townhouse/condo homes. Months supply of inventory increased by 6.3% for residential homes but decreased by 27.8% for townhouse/condo homes.
Affordability challenges have priced many buyers out of the market this year, and buyers who do succeed in purchasing a home are finding that the costs of homeownership have increased significantly, with monthly mortgage payments more than 55% higher than a year ago, according to the National Association of REALTORS®. Inventory remains lower than normal, and as the market continues to shift, experts project homes will begin to spend more days on market, and price growth will slow in the months ahead.