Washington • U.S. home sales fell for the sixth straight month in September, a sign that housing has increasingly become a weak spot for the economy.
The National Association of Realtors said Friday that sales declined 3.4 percent last month, the biggest drop in 2 ½ years, to a seasonally adjusted annual rate of 5.15 million. That's the lowest sales pace since November 2015.
Hurricane Florence dragged sales in North Carolina, but even excluding the storm's effects, sales would have fallen more than 2 percent. After reaching the highest level in a decade last year, sales of existing homes have declined steadily in 2018 amid rapid price increases, higher mortgage rates and a tight supply of available houses.
Housing will likely weaken further in the coming months, weighing on economic growth. September's weakness came before mortgage rates jumped further this month to their highest levels in seven years. Sales fell 4.1 percent in September from a year ago.
"Without a doubt there is a clear shift in the market," said Lawrence Yun, chief economist at the National Association of Realtors.
Home prices are rising at a slower pace and the supply of available homes, while low, is increasing, as more sellers are putting their homes on the market. Buyer traffic has also declined, Yun said.
Although housing is unlikely to add to growth this year, analysts are still mostly optimistic about the broader economy.
"Housing is no longer a tail wind for the economy, but the headwinds are blowing very gently," said Michelle Meyer, an economist at Bank of America Merrill Lynch, before the report was released.
Sales have fallen by the most in the West, where most of the nation's hottest real estate markets are located and where prices have soared for several years. Sales have tumbled 12.2 percent in that region in the past year, compared with a 5.4 percent drop in the South, which was held back by Hurricane Florence.
The highest-priced homes are also reporting slower sales, a shift from earlier this year, when sales slowdowns were concentrated in mid-priced and cheaper homes. Homes priced at $1 million and higher saw sales drop 2 percent from a year ago.
Higher borrowing costs are making housing less affordable. The average rate on a 30-year fixed mortgage slipped this week but remained near a seven-year high of 4.85 percent. A year ago, it stood at 3.88 percent.
There are also signs that home owners are increasingly unwilling to sell as mortgage rates rise. That's because many have rates below 4 percent, so selling a home and buying a new one would require them to accept a higher rate.
The Realtors surveyed consumers and found that 16 percent are unwilling to give up their mortgage rate and buy a new home. That’s up from a typical level of 10 percent.