Prices Continue To Increase In September Despite Softening Home Sales

Saddle Brook, NJ – October 25, 2023 – National sales of existing homes recently fell to a 7-month low, as surging borrowing costs, rising sales prices, and limited inventory continue to keep many would-be buyers out of the market. Borrowers have become increasingly sensitive to fluctuations in mortgage rates, which have remained above 7% since mid-August. With fewer buyers able to afford the costs of homeownership, existing home sales declined 0.7% month-over-month and were down 15.3% year-over-year, according to the National Association of REALTORS® (NAR).

Prices have continued to increase this fall despite softening home sales nationwide, as a lack of inventory has kept the market competitive for prospective buyers, sparking bidding wars and causing homes to sell for above asking price in some areas. Heading into September there were only 1.1 million units available for sale, 0.9% fewer than a month ago and 14.1% fewer than the same period last year, according to NAR. As a result, the U.S. median existing-home sales price rose 3.9% year-over-year to $407,100, marking the third consecutive month that the median sales price topped $400,000.

Highlights From September 2023 Report:

• Single Family Closed Sales decreased 20.6 percent to 428.
• Townhouse-Condo Closed Sales decreased 18.4 percent to 182.
• Adult Communities Closed Sales remained flat at 7.

• Single Family Median Sales Price was up 3.9 percent to $675,000.
• Townhouse-Condo Median Sales Price was up 17.8 percent to $489,000.
• Adult Communities Median Sales Price was up 94.7 percent to $625,000.

A Message From GBR Vice President, Nicola Esposito:

In speaking with fellow Realtors who've been successful in this industry for decades, I've noticed two very distinctly different statements: "This reminds me of the Sub-Prime Mortgage Crisis in 2008" and, "I've never experienced such low inventory with interest rate hikes going up this fast". 

When we look back at the Sub-Prime Mortgage Crisis, the circumstances were vastly different from the circumstances today. In 2008, inventory was up, interest rates remained stable overall, while demand was relatively low. The current climate is vastly different. Housing inventory is at an all-time low. According to the NJMLS Monthly Indicators, this year, new inventory is down 41% from September of 2022. If we look back at September of 2022, new inventory was down 33% from September of 2021. Some say that this is being promulgated by what is known as, "The Golden Handcuffs": homeowners who refinanced or purchased in 2020 and 2021, locked in interest rates below 3%, with no incentive to sell their home. Whatever we call it, these inventory numbers are unprecedented. With that, we have interest rates increasing in record time. According to Freddie Mac, the average mortgage rate went from 2.96% in 2021, to 5.34% in 2022, and this year the average will be 7.49%.

Never before have we seen an increase in interest rates over such a short period of time. Higher interest rates not only increase a Buyer's monthly payment, it decreases the amount a Buyer qualifies for based on their income; essentially lowering a Buyer's price-point. While inventory and interest rates are weighing down on the market, high demand from new generations of Buyers is sustaining a 6.7% increase in home prices year over year. All of these circumstances are making the prospect of owning a home out of reach for so many first-time-homebuyers.

As Realtors, our commitment to our Profession will be the difference. Now more than ever, hiring a professional Realtor to navigate this volatile market, will provide invaluable guidance to our clients. Our communication skills are integral to our success. Accurate information and data from our MLS will give our clients great perspective and help manage expectations. Protecting the American dream of homeownership is our duty as Realtors. Know your Value Proposition. 

"It's never just about selling homes. It's about bridging the American dream to reality." Tommy Choi Chicago REALTORS.

Click Here for the full ShowingTime report for the month of September 2023.

Data as of October 20, 2023. All data from New Jersey MLS and Hudson County MLS. Margin of error for reported statewide numbers is +/- 4% at a 95% confidence level. Provided by New Jersey REALTORS®. Report © 2023 ShowingTime.

About Greater Bergen Realtors®

Greater Bergen REALTORS® is a not-for-profit trade organization that serves more than 8,500 REALTOR® members throughout Bergen, Hudson, and Passaic Counties in New Jersey. We empower the success of those we serve by focusing on Connections, Advocacy, Resources, and Education. As the leading voice of real estate in Northern New Jersey, we advocate to protect private property and home-ownership rights.

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