Home Sales Picked Up in September. But This Is the Important Number to Watch.

(FREDERIC J. BROWN/AFP via Getty Images)

Key Points

• Previously owned home sales rose 1.5% from the prior month and 4.1% from a year ago, reaching a seasonally adjusted annual rate of 4.06 million.
• The number of homes listed for sale increased to 1.55 million, up nearly 14% from one year prior, matching a five-year high.
• The median home price in September was $415,200, a 2.1% increase from the previous year, with strongest gains in the Northeast and Midwest.

Home sales picked up in September—but there’s a more important number for investors to watch. The number of homes for sale is headed higher, with potential benefits for cost-burdened buyers.

After a slow spring and summer, lower mortgage rates coaxed some buyers and sellers to the closing table this fall. Previously owned homes were sold at a seasonally adjusted annual rate of 4.06 million, the National Association of Realtors said Thursday, up 1.5% from one month prior and 4.1% higher than one year earlier.

“As anticipated, falling mortgage rates are lifting home sales,” Lawrence Yun, the trade group’s chief economist, said in a statement. The average 30-year fixed mortgage rate in September was 6.35%, according to the release, a decline from August’s nearly 6.6% level. Mortgage rates this month have trended lower, with Freddie Mac’s weekly measure of the fixed 30-year rate dropping to 6.19% this week, the lowest since early October 2024. “Improving housing affordability is also contributing to the increase in sales,” Yun said.

Prices also rose. The median home sold for $415,200 in September, up 2.1% from one year prior. Price gains were strongest in the northeast and midwest, where prices rose a respective 4.1% and 4.7% from the year prior. Home sale prices rose 1.2% in the south and 0.4% in the west.

Investors shouldn’t put too much emphasis on the increase in sales. “I would not characterize [the monthly gain] as a breakout,” Yun said on a call with reporters. The reading was both slightly lower than the roughly 4.07 million rate that economists polled by FactSet had expected, and well below the long-term average above five million.

The trajectory of the housing market from here will depend on housing costs, as well as economic uncertainty that economists say has been keeping some buyers on the sidelines.

One gain worth watching, however, is inventory. The number of homes listed at the end of September increased to 1.55 million, up nearly 14% from one year prior and tied with July for the highest level since May 2020. More homes on the market could result in more choices—and bargaining power—for buyers.

“Inventory is matching a five-year high, though it remains below pre-Covid levels,” Yun added. The median home spent 33 days on the market, up from 28 days last September.

A separate Redfin report on Thursday noted that new listings rose 4.6% from one year prior in the four weeks ended Oct. 19. Pending sales fell 0.7% in the same period, marking the third week of drops.

“The big gap between home sellers and buyers, along with the improvement in purchasing power, make it a good time for buyers who can afford today’s high housing costs to jump into the market,” the brokerage said in a release. “Redfin agents in many parts of the country report that it feels like a buyer’s market, with sellers open to lowering the sale price and providing concessions.”

Write to Shaina Mishkin at shaina.mishkin@dowjones.com