The average used car in America sold for $28,237 in September. That’s 0.6% higher than August’s average price, meaning used car prices are essentially stable after a year of fluctuations.
Prices ended September just 6% higher than they had been a year ago.
Prices are stable because inventory is stable. America’s used car dealers ended the month with 2.46 million cars in stock — essentially unchanged from August.
That figure is 10% higher than inventory numbers from last September.
The news comes just days after new car prices fell for the first time in five months.
Interest Rate Increases May Be Squelching Demand
Stable prices sound like good news, but they may be a sign of trouble ahead.
“It may well be that higher interest rates are beginning to hurt used-vehicle demand because consumers can’t afford the higher monthly payments,” said Charlie Chesbrough, senior economist at Cox Automotive. “Slowing sales and building inventory could force dealers to lower prices over the next few months.”
Cox Automotive is the parent company of Kelley Blue Book.
The Federal Reserve raised interest rates in early October and promised to enact further increases later this year.
That has raised concern among economists that credit could flow only to a smaller, wealthier portion of the population, making all cars harder to afford. It may hit used car shoppers hardest, as new car dealers will tailor their lots to appeal to those easily able to qualify under stricter credit standards.
Cheapest Cars Still Hardest to Find
As with new cars, the lower the price, the tighter the inventory.
Car dealers track their stock of cars to sell with a metric called days of inventory — how long it would take to sell out of cars at today’s sales pace if they didn’t acquire any new ones.
The days’ supply increases with every $10,000 increase in the price category. Dealers ended September with just 33 days’ supply of cars priced under $10,000. At the opposite end of the spectrum, they held 65 days’ worth of cars priced over $35,000.
