Existing-home sales rebounded strongly in September following August’s decline and have now increased year-over-year for 12 consecutive months, according to the National Association of REALTORS®. All four major regions experienced sales gains in September.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 4.7 percent to a seasonally adjusted annual rate of 5.55 million in September from a slightly downwardly revised 5.30 million in August, and are now 8.8 percent above a year ago (5.10 million).
Lawrence Yun, NAR chief economist, says a slight moderation in home prices in some markets and mortgage rates remaining below 4 percent gave more households the confidence to close on a home last month. “September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007 (5.79 million),” he says. “While current price growth around 6 percent is still roughly double the pace of wages, affordability has slightly improved since the spring and is helping to keep demand at a strong and sustained pace.”
The median existing-home pricefor all housing types in September was $221,900, which is 6.1 percent above September 2014 ($209,100). September’s price increase marks the 43rd consecutive month of year-over-year gains.
Total housing inventory at the end of September decreased 2.6 percent to 2.21 million existing homes available for sale, and is now 3.1 percent lower than a year ago (2.28 million). Unsold inventory is at a 4.8-month supply at the current sales pace, down from 5.1 months in August.
“Despite persistent inventory shortages, the housing market has made great strides this year, backed by an increasing share of pent-up sellers realizing the increased equity they’ve gained from rising home prices and using it towards trading up or moving into a smaller home,” says Yun. “Unfortunately, first-time buyers are still failing to generate any meaningful traction this year.”
First-time buyers fell to 29 percent of sales in September after climbing to their highest share of the year in August (32 percent). A year ago, first-time buyers represented 29 percent of all buyers.
NAR President Chris Polychron says REALTORS® strongly back the passing of H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015.” Polychron testified in support of the bill before the U.S. House Financial Services Subcommittee on Housing and Insurance.
“This bill helps expand homeownership and rental housing opportunities at all levels and specifically includes changes to Federal Housing Administration policies that limit the flexible and affordable financing needed by many potential condo buyers – especially first-time buyers.”
“Home purchase affordability is strong in many markets, and September’s pace of existing sales is evidence that consumers are taking advantage,” says Quicken Loans Vice President Bill Banfield. “Rents have skyrocketed to extremely high levels, while rates and home prices have remained relatively flat through the summer months, providing a timely opportunity for new and existing homeowners.”
All-cash sales rose to 24 percent of transactions in September (22 percent in August) and are unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in September, up from 12 percent in August but down from 14 percent a year ago. Sixty-seven percent of investors paid cash in September.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage remained below 4 percent for the second consecutive month, declining slightly in September to 3.89 from 3.91 percent in August. A year ago, the average commitment rate was 4.16 percent.
Properties typically stayed on the market for 49 days in September, an increase from 47 days in August but below the 56 days in September 2014. Short sales were on the market the longest at a median of 135 days in September, while foreclosures sold in 57 days and non-distressed homes took 48 days. Thirty-eight percent of homes sold in September were on the market for less than a month.
Distressed sales– foreclosures and short sales – remained at 7 percent in September for the third consecutive month; they were 10 percent a year ago. Six percent of September sales were foreclosures and 1 percent (lowest since NAR began tracking in October 2008) were short sales. Foreclosures sold for an average discount of 17 percent below market value in September (18 percent in August), while short sales were discounted 19 percent (12 percent in August).
“The biggest surprise in the data was that the first-time buyer share fell to 29 percent from 32 percent in August,” says realtor.com® Chief Economist Jonathan Smoke. “But despite that decline, we estimate from the monthly sales data this year that first-time buyers have been responsible for 45 percent of the growth in sales over last year. The September share decline may simply reflect more competition in September by repeat buyers whose closings slipped in August due to the stock market disruptions.”
Single-family and Condo/Co-op Sales
Single-family home sales rose 5.3 percent to a seasonally adjusted annual rate of 4.93 million in September from 4.68 million in August, and are now 9.6 percent above the 4.50 million pace a year ago. The median existing single-family home price was $223,500 in September, up 6.6 percent from September 2014.
Existing condominium and co-op sales were at a seasonally adjusted annual rate of 620,000 units in September (unchanged from August), and are up 3.3 percent from September 2014 (600,000 units). The median existing condo price was $209,200 in September, which is 1.9 percent above a year ago.
Regional Breakdown
September existing-home sales in the Northeast jumped 8.6 percent to an annual rate of 760,000, and are 11.8 percent above a year ago. The median price in the Northeast was $256,500, which is 4.0 percent above September 2014.
In the Midwest, existing-home sales climbed 2.3 percent to an annual rate of 1.31 million in September, and are 12.0 percent above September 2014. The median price in the Midwest was $174,400, up 5.4 percent from a year ago.
Existing-home sales in the South rose 3.8 percent to an annual rate of 2.21 million in September, and are 5.7 percent above September 2014. The median price in the South was $191,500, up 6.2 percent from a year ago.
Existing-home sales in the West increased 6.7 percent to an annual rate of 1.27 million in September, and are 9.5 percent above a year ago. The median price in the West was $318,100, which is 8.0 percent above September 2014.
“Existing home sales are impacted by major stock market declines, since at least one in five buyers funds a portion or all of their purchase with stock or retirement accounts,” says Smoke. “But barring stock corrections that reflect real economic downturns — which we are not experiencing — home sales typically return to the prior trend after stock values stabilize.
“Tight supply is an impediment to future growth, and we are not seeing new construction grew enough to fill the void. As a result, we should expect to see tight supply remain a factor for the months and year ahead.”
For more information, visit www.realtor.org.
