LOS ANGELES — Sales of previously occupied U.S. homes slowed in September to the weakest annual pace in nearly 14 years even as mortgage rates eased and the supply of properties on the market continued to climb.

Existing home sales fell 1% last month, from August, to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marks the second straight monthly decline and the slowest annual sales pace since October 2010 when the housing market was still in a deep slump following the late-2000s real estate crash.

Sales fell 3.5% compared with September last year. On a regional basis, sales fell in the Northeast, South and Midwest last month from a year earlier, but rose in the West.

Overall, the latest home sales were short of the 3.9 million pace economists were expecting, according to FactSet.

“The factors that would drive higher home sales —- such as mortgage rates meaningfully lower now compared to one year ago, inventory beginning to increase and, of course, jobs continuously being added to the economy —- and yet home sales are stuck at low levels,” said Lawrence Yun, the NAR’s chief economist.

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Home Prices Continue to Rise Despite Slower Sales

Despite the slower sales pace, home prices increased on an annual basis for the 15th consecutive month. The national median sales price rose 3% from a year earlier, to $404,500.

While the rate of price growth has been slowing, the latest median sales price is 49% higher than it was five years ago, before the pandemic. By comparison, wages grew 25% in the same period, Yun noted.

Years of soaring home prices have helped put homeownership out of reach of many Americans, making housing a key political issue for voters in next month’s election.

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Mortgage Rates and Housing Market Outlook

The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of nearly 8%, according to mortgage buyer Freddie Mac.

Mortgage rates mostly eased since July in anticipation of last month’s move by the Federal Reserve to cut its main interest rate for the first time in more than four years and to signal further cuts through 2026. While the central bank doesn’t set mortgage rates, its policy pivot cleared a path for mortgage rates to generally go lower.

The average rate on a 30-year mortgage fell to 6.08% four weeks ago — its lowest level in two years — but has edged higher since then, reaching 6.44% last week.

“Falling mortgage rates in July and August were expected to bring more buyers into the market, but some home shoppers may be holding out for rates to fall further,” said Lisa Sturtevant, chief economist at Bright MLS. “Others may be taking a wait-and-see approach in the lead up to the presidential election.”

Economists generally expect mortgage rates to remain near their current levels, at least this year. Fannie Mae projects the rate on a 30-year mortgage will average 6.2% in the October-December quarter and decline to an average of 5.7% in the same quarter next year.

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Inventory Rises as Sales Slow

As sales have slowed, the inventory of homes for sale has kept ticking higher. There were 1.39 million unsold homes at the end of September, up 1.5% from August and 23% from September last year, NAR said.

That translates to a 4.3-month supply at the current sales pace, up from a 3.4-month pace at the end of September last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.

Another factor helping lift the inventory of homes on the market: Properties are taking longer to sell than a year ago.

Homes typically stayed on the market for 28 days last month before they were sold, up from 21 days a year earlier.

“Even with the recent increase in inventory one can say that’s helping loosen up the market, but it’s still far short of what would be considered a more normal inventory level,” Yun said.

Still, in a plus for home shoppers, fewer homes are receiving multiple offers. Some 20% of the homes that sold last month were bought for more than their original list price, down from 26% in September last year.

First-time homebuyers who don’t have any home equity to put toward their down payment continue to have a tough time getting into the housing market. They accounted for just 26% of all homes sold last month, matching the all-time low from August. It was down from 27% in September last year. They’ve accounted for 40% of sales historically.

Homebuyers who can afford to sidestep mortgage rates and pay all cash for a home accounted for 30% of sales last month, up from 29% a year earlier.