(Bloomberg) -- Sales of previously owned U.S. homes eased in September to the weakest pace in almost three years as the supply of available properties remained tight, a sign rising prices and mortgage costs are keeping potential buyers on the sidelines, a National Association of Realtors report showed Friday.

Key Takeaways

The sixth-straight monthly drop in sales, the longest streak since 2014, underscores what’s now a challenging time in the real estate market for buyers. The average mortgage rate for a 30-year fixed term has advanced nearly 1 percentage point this year, compared to a decline in 2017, according to Bloomberg calculations of Bankrate.com data.

Rising prices are also keeping homes unaffordable, particularly for first-time buyers. Those price gains are fueled by demand -- homes stayed on the market for only 32 days on average, compared with 34 days a year earlier. There’s also a lack of supply, with inventories ticking up yet remaining tight.

At the same time, tax cuts and a tight jobs market -- keeping people steadily employed and helping lift wages -- should continue buoying some buyers.

“There is without a doubt a clear shift in the market as evidenced by lower sales and higher inventory,” Lawrence Yun, NAR’s chief economist, said at a briefing accompanying the release of the report.

Hurricanes may have impacted sales data by curbing home-buying plans and transactions, though the latest storms impacted a small share of deals, NAR said. Florence’s mid-September Florida landfall came about a year after Irma battered the state.

The data are also in line with government numbers Wednesday that showed new-home construction fell in September as Florence disrupted activity in the South. Future building also showed signs of weakness with multifamily permits dropping by the most in two years.

Other Details

  • Purchases fell in three of four regions, led by a 5.4 percent slump in the South; Midwest sales were unchanged from the prior month
  • At the current pace, it would take 4.4 months to sell the homes on the market, compared with 4.3 months a year earlier; Realtors group considers less than five months’ supply consistent with a tight market
  • Existing home sales account for about 90 percent of the market and are calculated when a contract closes. The remainder of the market is made up by new home sales, which are considered a timelier indicator and are tabulated when contracts get signed

--With assistance from Chris Middleton.

To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns, Randall Woods

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