Mortgage Rates Fall, Boosting U.S. Home Sales — But Prices Stay High
Lower mortgage rates are finally bringing some heat back to the U.S. housing market. Home sales rose in September for the first time in months, even as prices continued their slow climb.
According to the National Association of Realtors (NAR), sales of previously owned homes increased 1.5% from August, reaching an annualized rate of 4.06 million units — the strongest pace since February. Year over year, sales were up 4.1%.
Lawrence Yun, NAR’s chief economist, summed it up simply: “As anticipated, falling mortgage rates are lifting home sales. Improving housing affordability is also contributing to the increase in sales.”
Mortgage Rates Slide — From California to Nationwide
The average 30-year fixed mortgage dropped to around 6.17%, down from over 6.6% just a few months earlier, according to Bankrate mortgage rates and NerdWallet mortgage rates data.
In California, where buyers have been hit hardest, mortgage rates today are hovering just above 6%, giving a much-needed breather to first-time buyers and investors alike. HSBC mortgage rates, Citizens Bank mortgage rates, and Citi mortgage rates also showed modest declines, following the broader downward trend seen across U.S. mortgage rates this fall.
Even NFCU mortgage rates and Summit mortgage rates — both popular among credit union borrowers — reported small but notable rate dips, making refinancing more attractive.
Fannie Mae mortgage rates and Third Federal mortgage rates followed similar trajectories, tracking the softening in Treasury yields as the stock market today posted modest gains amid expectations of further Federal Reserve easing.
The Numbers Behind the Rebound
Here’s the thing — these sales figures reflect deals likely signed in July and August, when rates first began to fall. That means the full impact of lower borrowing costs may not show up until late fall and winter.
Inventory ticked higher, up 14% year-over-year, to 1.55 million homes available nationwide — the highest level in five years but still below pre-pandemic norms. At the current pace, that’s a 4.6-month supply, short of the six months considered a balanced market.
Home prices, meanwhile, aren’t backing down. The median U.S. home price hit $415,200, up 2.1% from last year, marking the 27th consecutive month of price growth.
High-End Homes Lead the Way
Luxury sales are driving much of the momentum. Homes priced above $1 million saw a 20% year-over-year increase, while lower-end homes — those under $100,000 — barely budged at 3% growth.
Many wealthier buyers are taking advantage of 10-year mortgage rates and 15-year mortgage rates that have fallen even faster than the 30-year options, giving them room to upgrade or refinance without absorbing high interest costs.
A Slow but Steady Turnaround
Even as home sales improve, the market still feels uneven. Open stock performance — particularly in real estate-related equities — reflects cautious optimism. Analysts at Fannie Mae and Citi expect further easing in mortgage rates over time, but warn that affordability will remain a challenge unless supply grows significantly.
Homes are also staying on the market longer. The typical listing took 33 days to sell in September, up from 28 days a year ago. About 30% of all transactions were all-cash, while first-time buyers made up another 30%, a sign that younger households are starting to return to the market.
What It Means Going Forward
Mortgage experts across Bankrate, NerdWallet, and Summit Mortgage forecast that rates could continue trending downward through early 2025 if inflation cools and the Fed maintains its current stance. That could drive another wave of refinancing and push more hesitant buyers off the sidelines.
In short, the housing market isn’t roaring back — but it’s waking up. Lower mortgage rates have cracked open the door for buyers again, and while prices remain stubbornly high, the fall in borrowing costs has already started to shift the mood.
As Yun put it, “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. The housing market is healing — just not all at once.”
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