September Existing Home Sales Jump 3% on Strength From First-Time Buyers

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The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in September rose 3.2% to 5.47 million from a downwardly revised total of 5.3 million in August.

The consensus estimate called for sales to reach 5.35 million, according to a survey of economists polled by Bloomberg. Sales are at their highest level since June (5.57 million), up 0.6% over September 2015.

The NAR’s chief economist, Lawrence Yun, said:

The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of the competition for the minimal amount of homes for sale. Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month.

Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in. Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand.

Housing inventory increased by 1.5% in September to 2.04 million homes, equal to a supply of 4.5 months. Inventory has declined year over year for 16 consecutive months and is currently down 6.8% year over year from 2.19 million.

According to the NAR, the national median existing home price for all housing types in September was $234,200, up 5.6% compared with September 2015, the 55th consecutive month of rising home prices. In August the national median price was $240,200.

The percentage of first-time buyers jumped to 34% in September, an increase of 3 percentage points to its highest level since July 2012. Yun commented on the increase:

There’s hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring. The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate.

Sales of single-family homes rose 4.1% from the August total to a seasonally adjusted annual rate of 4.86 million, and it is up 0.6% compared with September 2015. Sales of multifamily homes declined 3.2% in September to a seasonally adjusted annual rate of 610,000 units.

All homes were on the market for an average of 39 days in September, up from 36 in August and down from 49 in September 2015. Foreclosed and nondistressed homes were on the market for an average of 67 and 38 days, respectively, and short sales took a median of 118 days to sell.

The NAR also reported the following regional data:

  • September existing-home sales in the Northeast rose 5.7% year over year to an annual rate of 740,000, unchanged compared with a 2015. The median price in the Northeast was $261,600, up 2.1% compared with September 2015.
  • In the Midwest, existing-home sales increased by 3.9% to an annual rate of 1.32 million in September and are now 2.3% higher than September 2015 sales. The median price in the Midwest was $184,500, up 5.9% from a year ago.
  • Existing-home sales in the South rose just 0.9% in September to an annual rate of 2.16 million, but are 0.9% below September 2015 sales. The median price in the South was $204,000, up 6.6% from a year ago.
  • Existing-home sales in the West jumped 5% to an annual rate of 1.25 million in September, and they have moved 1.6% higher than in September 2015. The median price in the West was $345,400, up 8.1% compared with the September 2015 median.
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