Home listings decreased in September, causing a drop in sales

Both new listings and overall housing supply tumbled in September, which took a toll on sales.

Newly listed homes declined 2.3% from August and 9% year-over-year while total for-sale properties dropped 2% monthly and 19% annually, according to Redfin. With softening competition and COVID-19 infection rates decreasing from the summer, industry experts believe an increasing number of owners will list their houses, which could be the largest driver of inventory over the next 12 months.

"The severe lack of inventory is restricting home sales," Daryl Fairweather, Redfin chief economist, said in the report. “The homebuyers who are just beginning their search are finding that the well has run dry. But I am hopeful that as it becomes easier to get building materials, we will finally have a strong year for new construction in 2022. That's what the market needs more than anything."

For the second consecutive month and only the second time in the past 16, completed sales fell annually. Despite a 1.6% rise from August, the number of homes sold dropped 5.4% from Sept. 2020. Meanwhile, pending sales went in the positive direction, increasing 2.8% annually and 2.9% monthly. Growing pessimism among buyers during the month played a role, as they cited exhaustion with the record appreciation rates, according to the latest Fannie Mae Home Purchase Sentiment Index.

However, that didn’t stop home prices from annual double-digit gains for the 14th month in a row. The median sales price tracked by Redfin went to $376,800, inching down 0.8% from August’s all-time high while ballooning 13.9% from the year before. The time listings spent on the market fluctuated similarly, settling at 18 days from 16 in August and 29 from Sept. 2020.

Broken down by the 85 largest metro areas, Austin, Texas, outpaced the nation in new listings, up 17.6% over the year before. Tacoma, Wash., and Portland, Ore., followed with jumps of 9.1% and 8.3%, respectively. On the other end of the spectrum, new listings fell in Baton Rouge, La., by 59%, Salt Lake City by 51.3% and New Orleans by 49.4%.

Austin also led in overall inventory gains from a year ago, increasing 3.3%. Supply only grew in two other markets, Tacoma by 2.6% and Columbus, Ohio, by 0.3%. Similarly, Baton Rouge declined most with a 52.6% drop, trailed by 50.3% in Salt Lake City and 46.9% in Rochester, N.Y.

With people returning to cities, New York posted the largest jump in year-over-year sales at 25.9%. Honolulu was next up at 23.6% with San Jose, Calif., in third at 14.7%. Sales in New Orleans fell furthest from last September, dropping 41.7%, nearly doubling the declines of 23.5% in Bridgeport, Conn., and 23.3% in Salt Lake City.

A trio of hot markets saw the biggest annual gains in home prices, led by 27.8% in Salt Lake City, 27.3% in Austin and 25.6% in Phoenix. Austin exhibited a 4.8% decline in prices month-over-month. Bridgeport, Conn., was the only metro that declined year-over-year, falling 2.2%. It finished below rises of 1.2% in Memphis, Tenn., and 3.9% in Kansas City, Mo.